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Lenders 360

Tips on Negotiation Agreements: What Information Should You Want?

Posted in Tough Times for Lenders, Training

Information.  Information.  Information.  Lenders and servicers want it (they already are stuck with the "location, location, location").  Borrowers in distress might not want to furnish it.

What is a lender or servicer to do?  How can they get it?

Answer: include delivery of the information as part of the discussion or negotiation letter.

Here is a quick list of items that might be part of a negotiation letter.  Of course, you should always craft it for your situation; and discuss it with your lawyer -

  •  Borrower organizational documents, with all amendments (including offering circular if applicable)
  • Identification of the current property owner; and of each owner of Borrower
  • Current Form W-9 for borrower and all guarantorsindemnitors
  • Description of the physical condition of the property and any needed repairs
  • Occupancy level and rent roll (in form approved by lenderservicer)
  • Leasing concessions (and maybe lease summaries)
  • Management agreement
  • Leasing agreement
  • Project operating statements (prior ___ years)
  • Pro forma operating statement (current year)
  • Financial statements for borrower (including each owner holding more than __% ownership of borrower) and for each guarantorindemnitor); include cash flow statements (prior __ years)
  • Copies of bank statements (last __ months)
  • Copies of documents for any junior lien loan and of any other loans
  • Copies of any guaranty or indemnity agreements executed by each guarantorindemnitor for the benefit of other lender  (even "bad-boy" agreements andor for debt not related to borrower)
  • Information on items unique to the project ("smart" buildings; unique permits; etc.)

Understanding the legal, physical, financial and operating condition of the project, the borrower and each guarantorindenmitor is a basic task.

- what should be added to this list?

Please post your comments below.