Commercial and industrial (C&I) lenders know that non-financial factors such as the borrower’s industry, its competitive market, and its management team play a key role in the ongoing success of the business, as well as timely loan repayment. Commercial real estate (CRE) loans have similar non-financial factors or issues, including the type of property (similar to C&I industry risk), ability to successfully re-lease the property over the loan term (competitive market), and proper management and maintenance of the physical facility.
As banks continue to deal directly with CRE loans as a major portion of their loan portfolios, plus indirectly through income-producing or rental real estate holdings that affect customers, it is important to “get beyond the numbers” and assess the qualitative or non-financial factors that influence CRE performance over time.
- Differentiating among property types – key terminology and operating factors for multi-family, retail, office and industrial/warehouse
- Additional issues with owner-occupied and “specialty” properties, such as hotels and nursing homes
- “Triple net” versus full service leases
- Overview of other common provisions in commercial leases, including
- Reimbursement for common area maintenance (CAM)
- “Go dark” clauses
- Cotenancy clauses
- Requirements placed on the tenant
- Requirements placed on the landlord
- Subordination, non-disturbance and attornment provisions
- Unusual or extraordinary lease provisions, such as building naming rights
- Re-lease and rollover risk
- Physical style risk and ongoing property management risk
- The concept of sponsorship
Who Should Attend?
Commercial lenders, credit analysts and small business lenders, consumer lenders, mortgage bankers and private bankers; loan review specialists, special assets officers, lending managers and credit officers.
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