Real Estate Finance Transactions

[Fairy Dawdy]

MayerBrown's Real Estate Finance practice offers leading financial institutions practical experience, technical skills, commercial knowledge and an understanding of the challenges and rewards in the current market. Our real estate finance practice has a well-established presence in the market. We have a long track record of having acted for both lenders and borrowers whether on bilateral or syndicated facilities on domestic and complex, multijurisdictional transactions. We maintain close relationships with, and act for, many of the lenders who are active in our domestic and cross-border markets. Our experience means we are familiar with the most innovative and structured of transactions, which often involve the use of offshore entities and tax structuring in jurisdictions including Jersey, Guernsey, the Isle of Man, Luxembourg, the Cayman Islands and the BVI.

We regularly represent individual lenders, syndicates and other market participants in all types of real estate finance transactions. As part of these deals we are often involved in structuring the relevant financing arrangements. Our practice covers origination of real estate finance transactions as well as the subsequent distribution (whether by way of syndication, securitization or otherwise).

"Mayer Brown has a deep bench of talented lawyers covering most if not all practices and specialties. Its lawyers are commercially minded with a good understanding of the client's goals and objectives."

Whether you're looking to purchase a home or invest in commercial properties, understanding the basics of real estate finance is essential for success. An exciting, challenging line of business, real estate finance involves the analysis, planning and management of financial resources related to commercial and residential loans and properties. This post provides an overview of several key topics and concepts, from valuation methods to careers in real estate finance.

Real estate finance is a branch of finance that focuses on how people purchase real estate, whether that be a home, an office building or a plot of land.1 This area of finance involves the analysis, planning and management of financial resources related to real estate, commercial loans and properties. It also includes financial processes around real estate, such as acquisition, development, construction and operation of commercial and residential properties.

Commercial and residential properties are two main types of real estate. While both types of properties share some similarities, there are also significant differences between them that make them distinct from one another.

Commercial real estate refers to properties that are primarily used for business purposes.2 This includes office buildings, retail spaces, warehouses, industrial buildings and land zoned for commercial use. Commercial properties are often owned by businesses, or real estate agents, investors or developers who lease or rent the property to tenants.2

Commercial properties require a significant investment upfront, as they are often more expensive than residential properties. Commercial real estate investors and developers often need to borrow money or secure real estate financing to purchase or develop commercial properties.

Residential real estate refers to properties that are used for living purposes, such as single-family homes, apartments, condos and townhouses.5 Residential properties are typically owned by individuals or families who either live in the property or rent it out to tenants.

Residential properties are valued through three main types of valuation, including fair market value, appraised value and assessed value.6 Each valuation type is tied to a different function. For example, fair market value is used to price a home to prospective buyers. It looks at factors like location, size, amenities and the condition of the property in comparison to similar homes in the same area.5 The appraised value must be calculated by a licensed appraiser and is typically used for borrowing to purchase a home or when refinancing a home. The assessed value is determined by the local county tax assessor in order to collect the appropriate amount of property taxes.

Real estate finance professionals play an important role in helping both individuals and businesses obtain loans or other forms of real estate financing from banks, mortgage lenders or other financial institutions. To pursue a career in this field, a degree in finance, real estate or a related field is typically required, along with relevant experience and industry certifications.

A real estate analyst provides financial analysis for investment opportunities, evaluating the potential risks and returns of a project or property.8 They gather data and create financial models to help guide investment decisions based on market trends and economic conditions.

A real estate investment analyst prepares underwriting of properties using projections, market research and financial statements.10 Using this data, they assess risks in order to make recommendations to potential investors.

A real estate asset manager manages and maximizes the value of a portfolio of properties on behalf of an investor or company.14 They develop strategies to increase revenue and reduce costs, monitor performance and oversee property maintenance and improvements.

The Online MSF is designed for working professionals and features a comprehensive curriculum that will hone your competitive edge in many business areas, from corporate finance to financial planning and beyond.

Take a deeper dive in real estate with two courses focused on real estate finance and investment. In your real estate finance course, you will learn about a wide range of real estate topics, from understanding the home buying process to programming complex mortgages. In your course on real estate investments, you will improve your understanding of the real estate asset class.

This course surveys basic business transactions involving real estate and provides an understanding of the legal framework and practical considerations affecting real estate and finance transactions. The course covers acquisitions and dispositions, including purchase and sale agreements, deeds, title insurance, closing adjustments, transfer taxes, and other legal and business matters relating to the real estate closing. It also covers real estate finance (secured lending, mortgage law, installment land contracts, foreclosures, lien priorities, and practical issues when representing a lender or borrower). Commercial leasing and ground leases as well as real estate development are topics further covered by this course. This course provides a foundation for other advanced real estate courses.

This upper-level substantive course provides an overview of the legal framework and business concerns related to a real estate transaction. Materials presented in this course are tested on the New York Law Exam (NYLE), Multistate Bar Exam (MBE) and Multistate Essay Exam (MEE).

We advise clients in structuring, documenting, closing, servicing, restructuring, and enforcing real estate debt and equity transactions. With more than 85 lawyers in our Real Estate Finance Group throughout the United States, our law firm offers nationally recognized skill and experience, local market knowledge, and a comprehensive understanding of the issues that drive transactions and markets.

Our attorneys work closely with colleagues in other practices across the firm to effectively provide the resources and experience necessary for each matter. We represent clients in structuring, negotiating, documenting, closing, and servicing a broad range of real estate finance transactions, including the origination of senior and junior mortgage loans, development and construction loans, bridge loans, loans for securitization, mezzanine loans and loans with syndicated and A/B structures. We also handle preferred equity and joint venture investments and credit-tenant private placement transactions.

We advise clients in originating syndicated and structured loans and we routinely negotiate and document co-lender and intercreditor arrangements. Our lending clients include institutional and investment banks, insurance companies, finance and specialty lending companies, private equity firms and mortgage REITs. We also actively represent real estate investment companies and developers in, as borrower, a wide variety of single- and multi-property loan transactions as well as in joint venture and preferred equity transactions involving a wide variety of property types, including multifamily rental, residential and commercial condominium, retail, office, industrial, and hospitality projects.

Our lawyers have sophisticated and deep experience representing clients throughout the debt stack. With integrated offices across five continents, we have one of the largest global real estate finance law practices. Our practice combines lawyers with core competencies in real estate, corporate finance, restructuring, tax, and regulatory matters to offer our clients unparalleled service while handling a wide range of real estate finance transactions.

Our lawyers provide strategic and practical advice on finance matters on behalf of borrowers, lenders, servicers, and securitization and syndication market participants, including the origination and sale of senior and mezzanine loans, construction loans, credit facilities, bridge debt, warehouse loans, leasehold finance, and the securitization and syndication of commercial real estate mortgages and other assets backed by real estate.

A large portion of our work involves helping clients navigate the increasingly complex debt markets in their home jurisdiction and abroad. Our transaction teams are led by partners with significant real estate debt knowledge. Our array of clients include insurance companies, investment and commercial banks, and foreign investment trusts that extend debt, as well as owners, operators, and developers who accept debt, together with servicers and other debt market intermediaries.

3a8082e126