Best practices in commercial real estate financing: essential issues in negotiating A/B note intercreditor agreements

The article states that a loan secured by commercial property (commercial mortgages), as one of the most popular types of corporate loans has a number of advantages compared to other types of borrowing: the borrower is able to quickly get the necessary amount of money for any need - business expansion, working capital, ability to Finance large deals, and the disposal of banks remains liquid assets, quick sale which will cover damages in case of default by the cus-tomer of the terms of the loan. It is confirmed that the product is characterized by specific risks, often resulting in refusal of credit or their manifestations in the course of servicing the debt: unac-ceptable for the lender level of capitalization and liquidity of the collateral, the degree of occupan-cy of commercial real estate and the level of indexing of interest rates on leases; rental impropriety of the object for commercial use; encumbrances accept collateral in other liabilities etc. It is noted that one of the ways to improve the process of commercial mortgage lending in order to reduce transaction risks is its standardization. In the Russian Federation, the Association of Russian Banks is developing banking standards, which to date has approved more than fifteen standards (most of them are banking business process quality standards and methodological documents). It is pro-posed to develop a Standard for the lending process secured by commercial real estate; a matrix of requirements for the components of this process is provided, reflecting the best practices of leading Russian banks working in the field of commercial mortgages. In using the Standard, stakeholders are both credit institutions and borrowers.

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Financing Commercial Property in Poland and the UK

Olsztyn Economic Journal ◽

10.31648/oej.3414 ◽

2012 ◽

Vol 7 (1) ◽

pp. 143-151

Author(s):

Tomasz Lechowicz

Keyword(s):

Real Estate ◽

Commercial Real Estate ◽

External Financing ◽

Project Financing ◽

Investment Funds ◽

Commercial Property ◽

Strong Point ◽

Private Investors ◽

The Uk ◽

Real Estate Financing

The following work is a comparison of real estate financing methods in Poland and Great Britain. A comparison of the data from both countries shows that the most popular method of real estate financing in both countries is through mortgages. External financing of commercial real estates in Poland is accomplished by: universal and mortgage banks, leasing companies, investment funds-loan, private investors and through the issue of ownership or debt securities. Another method of financing commercial real estate is financing it through the establishment of a special, separate company designed to carry out the project, which is known as "project financing". The availability of a variety of grants, preferential loans and time loans, is the strong point of the Polish system of financing commercial property purchases.

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