Loan
Participations
Loan participation involves more than meets the eye. Issues that must
be addressed include the fundamental legal nature of the relationship
between lead lender and participant, the sharing percentages or other
economic arrangements relating to advances, repayments, income, fees,
and expenses, logistics for co-funding and distribution of loan repayments
and income, management and servicing rights and responsibilities, and
unforeseen circumstances involving loan modifications and increases,
workouts, foreclosure, or bankruptcy.
We have handled participations of various kinds for almost all of the
lender clients that we represent. For some clients we document participation
in virtually every loan they make. For others, we have simply created
their forms. Our participation arrangements have involved both single
loan participations and master pooled participation arrangements. We
understand the dynamics between the lead lender and participant when
problems arise, and have been involved in difficult negotiations and
adversary proceedings when lenders were in disagreement about remedies
or workout terms. We have seen many participation agreements that fail
to address necessary items.
Investment
Funds for Real Estate Lending
Over the past three years, we have helped create investment funds sponsored
by our lender clients with over $200 million in capital for the purpose
of making loans and equity investments in real estate. In contrast to
participation in particular loans or pools of loans, these funds involve
the creation of separate legal entities, usually multiple tier limited
liability company structures, to make a high volume of loans or other
investments. Investors in such funds have included private investors,
other financial institutions, or pension plans. We have also handled
the licensing and regulatory compliance for these entities.
