Select Participation and Syndication Issues
Publication| Real Estate Services
Commercial real estate finance has evolved from straightforward single lender/borrower structured loans into more complex, layered capital-market transactions involving multiple lenders. This “evolution” provides borrowers with access to larger-sized loans and permits banks to pool resources, allowing banks to enhance liquidity while spreading its risk and credit exposure. Lenders should be mindful of the structures and pitfalls involving loan participations and syndications, as hidden within these transactions are all sorts of risks that lenders should be aware of. While there are many benefits to participation and syndicated loan structures, parties should think about what will happen in the event of a borrower default. This article provides a primer on these structures and identifies key issues to be aware of.