Cover image for Property Finance

Property Finance

Author Antonio Mazza , Giacomo Morri
Release Date: 2015/01/01
ISBN: 9781118764404
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Book Description

A unique, international approach to optimal real estate financing

Property Finance is an authoritative guide to both the financial and legal issues surrounding real estate financing. Unique in its exclusive focus on the topic, this book builds from a solid theoretical foundation to provide practical tools and real-world solutions. Beginning with a discussion of the general issues encountered in real estate finance from an international perspective, the authors delve into country-specific information and set out the legal peculiarities of eight important countries (Germany, France, Italy, Spain, China, India, England and Wales) by asking questions of relevance to the leading local law firms specializing in real estate financing. The reader may thus consider in greater depth the problems relating to any given country and compare and contrast the positions under different legal systems.

Examples with numerical calculations and contract excerpts enhance the explanations presented, and are immediately followed by practical case studies that illustrate the mechanisms at work. The companion website features downloadable spreadsheets used in the examples, power point presentations, as well as real estate news and more.

Property financing entails many sources of capital, including both debt and equity resources as well as hybrid forms like preferred equity and mezzanine debt. Knowing how to work with these avenues is important to ensuring financial sustainability in real estate assets. Property Finance covers the most common issues encountered, helping readers prepare for and find a way around possible roadblocks.

  • Consider the issues surrounding real estate lending at an international level
  • Compare and contrast the positions under different legal systems
  • Develop an international perspective on cash flows and financing agreements
  • Use powerful tools to structure financing and gauge its effects on property financing

The success of a real estate investment is dependent upon optimal financing, and a mere bird's eye view of the topic does not fully prepare investors for issues ahead: Property Finance provides a knowledge-based approach to real estate investment, detailed information and powerful tools.

Table of Contents

  1. Title Page
  2. Copyright
  3. Dedication
  4. Foreword
  5. Foreword
  6. Preface
  7. Preface to Part Two
  8. Acknowledgements
  9. List of Figures
  10. Reader's Manual
  11. Part One
  12. Chapter 1: Introduction to Property Financing
    1. 1.1 Forms of financing: debt and equity
    2. 1.2 A different approach to property financing
    3. 1.3 Corporate finance and project finance
    4. 1.4 Bank financing
    5. 1.5 Fund raising, securitization, and syndication
  13. Chapter 2: Structured Real Estate Financing
    1. 2.1 Bank roles
    2. 2.2 Bank loan contractual forms
    3. 2.3 Loans for development projects
    4. 2.4 Parts and stages of a structured loan
  14. Chapter 3: Loan Agreement
    1. 3.1 Object and purpose of the loan
    2. 3.2 Conditions precedent
    3. 3.3 Amount of the loan
    4. 3.4 Interest rates
    5. 3.5 Interest rate risk hedging
    6. 3.6 Loan allocation
    7. 3.7 Loan repayment schedule
    8. 3.8 Fees
    9. 3.9 Frequency of drawdown and procedures
    10. 3.10 Events of default
    11. 3.11 Property insurance
    12. 3.12 Representations and warranties
    13. 3.13 Duty to provide information
    14. 3.14 Costs, taxes, and ancillary charges
    15. 3.15 Contractual covenants
  15. Chapter 4: Loan Repayment, Interest, and Renegotiation
    1. 4.1 Bullet payments
    2. 4.2 Pre-amortizing (semi-bullet)
    3. 4.3 Balloon payment
    4. 4.4 Fully amortizing repayment plans
    5. 4.5 Other repayment schedules
    6. 4.6 Restructuring and renegotiation of real estate loans
  16. Chapter 5: Effects of Financial Leverage on Real Estate Investments
    1. 5.1 An illustration of financial leverage
    2. 5.2 The effects of an increase in volatility
    3. 5.3 The effect of financial leverage on returns
    4. 5.4 The effect of financial leverage on risk
    5. 5.5 “NO FREE LUNCH”
    6. 5.6 The mechanics of financial leverage
    7. 5.7 The effect of the spread
    8. 5.8 A brief summary of when to use financial leverage
  17. Chapter 6: Structured Real Estate Financing Case Studies
    1. 6.1 Structured financing for an income producing property
    2. 6.2 Structured financing for a real estate portfolio acquisition
    3. 6.3 Financing of a real estate development project
    4. 6.4 Financing a shopping centre: credit application
  18. Chapter 7: Hybrid Forms of Financing
    1. 7.1 Description
    2. 7.2 Procedures for establishing mezzanine finance and cost
    3. 7.3 Covenants in a mezzanine financing
    4. 7.4 Economic mechanics of hybrid financing
    5. 7.5 Waterfall payout agreement
    6. 7.6 Intercreditor agreement
  19. Chapter 8: Basel Accords and Effects on Real Estate Financing
    1. 8.1 Basel II
    2. 8.2 Basel III
    3. 8.3 The Basel Accords and real estate financing
    4. 8.4 Standardized Approach
    5. 8.5 IRB Foundation and Advanced methods
  20. Part Two: Outline of the most relevant legal issues in selected jurisdictions
  21. Chapter 9: China
  22. Chapter 10: England and Wales
  23. Chapter 11: France
  24. Chapter 12: Germany
  25. Chapter 13: India
  26. Chapter 14: Italy
  27. Chapter 15: Spain
  28. Authors
    1. Giacomo Morri
    2. Antonio Mazza
    3. Alessandro P. Scarso
  29. References
  30. Index
  31. End User License Agreement
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