Doug Cornelius .com
mezzanine loans
The Case for Exotic Notes in Commercial Real Estate Transactions
Fran Mastroianni of Goodwin Procter LLP, published a story in Real Estate Investment & Finance: The Case for Exotic Notes in Commercial Real Estate Transactions. “PIK (payment-in-kind) Notes and Toggle Notes, which began as alternative debt instruments with safety valve features attractive to the real estate industry, became a life jacket keeping overly aggressive financially [...]
The Mezzanine Section is the Nose Bleed Section
The Wall Street Journal has an article in the C Section by Jennifer S. Forsyth and Kemba J. Dunham on real estate mezzanine loans: Real-Estate Investors Like View From Mezzanine Section. If mezzanine investors think that it is a “no-lose bet” they are getting themselves in trouble. There is a higher return on mezzanine debt [...]
Usury in Massachusetts
I ran across two articles on usury and expect we will see more as the debt markets and foreclosures continue to sort themselves out and more borrowers are faced with foreclosure. Usury is the charging of excessive interest on a loan. Most states have a law prohibiting usury and defining what is meant by usury. [...]
A CMBS and CDO Primer
Parke Chapman wrote a primer in the National Real Estate Investor on CMBS, CDO and the commercial debt markets. Some highlights: Q: What led to the formation of the first commercial real estate CDO in 1999? A: Commercial real estate CDOs were a major innovation in part driven by the need to diversify risk after [...]
Guarantee Liability with Mezzanine Loans and Mortgages
With mezzanine financing, there is a potential guarantee liability to the principals of the developer that they may not foresee. The issue arises in a financing that has a mortgage loan with springing guarantees combined with a mezzanine loan secured by a pledge of interests in the mortgage borrower. Generally, the principals of a mortgage [...]
Real Estate Development From Beginning to End in Massachusetts
I will speaking as part of the seminar: Real Estate Development From Beginning to End in Massachusetts in Dedham on November 16, 2007. Agenda 8:30 am – 9:30 am Site Selection and General Due Diligence Matthew J. Lawlor, Esq. 9:30 am – 10:30 am Due Diligence – Land Use and Environmental Matters Patrick M. Butler, [...]
Secured Real Estate Mezzanine Lending
I just received a copy of an article by James D. Pendergast, Senior Vice President and the General Counsel of the U.C.C. Division of the First American Corporation: Secured Real Estate Mezzanine Lending (with Form). Mr. Pendergast proposes that a mezzanine lender have their borrower opt into Article 8 of the U.C.C. and have the [...]
Moody’s Approach to Rating Commercial Real Estate Mezzanine Loans
In March, 2007, Moody’s released their rating methodology for Mezzanine Loans: Moody’s Approach to Rating Commercial Real Estate Mezzanine Loans. This report outlines Moody’s view of a baseline, “credit neutral” mezzanine loan structure and how they apply that view in rating mezzanine loans. Baseline Expectations: Mezzanine Loan Agreement – comparable to CRE mortgage loan agreement. [...]
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