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.