The REF agreement is therefore a welcome step forward and aims to promote market efficiency through the LMA and to provide a common framework and language for those involved in real estate finance transactions. The expectation is that advisors will be able to spend more time negotiating the specific provisions of the agreement rather than discussing the boiler platform. A revolving credit facility is a type of loan granted by a financial institution that offers the borrower the opportunity to claim or withdraw it, repay it and withdraw it. It is essentially a variable rate (fluctuating) line of credit. The REF agreement also provides for a specific structure – and typical of real estate investments. The parent company will create real estate borrowers to whom the lender will give funds; Equity participation is achieved through ordinary shares and downstream subordinated debt securities, both at the parent and borrower levels; No mezzanine financing is provided, but hedging is provided for variable-rate financing (the REF agreement allows fixed and variable interest rates); the counterparty that is a candidate for coverage is a party to the document. With about 162 pages (in its syndisible form), the document is probably too cumbersome for the majority of real estate financing transactions, often bilateral and individual. The document should therefore be simplified with regard to these transactions. Some clauses are recognized as broader than they should be. The confidentiality clause, for example, goes too far. The group that approved the document felt that it was better to insert and remove language than not to have it at the beginning. The entity may take out a credit facility on the basis of guarantees that may be sold or replaced without changing the terms of the original contract. The establishment may apply to different projects or divisions within the company and be distributed at the discretion of the company.
The repayment period of the loan is flexible and depends, as with other loans, on the credit situation of the company and how well it has repaid its debts in the past. The agreement provides for a priority lending facility in a currency to finance multi-property operations, with the properties located in England and Wales or Scotland. Loans are granted to individual borrowers, while equity and subordinated debt securities are downstream of a holding company. Guarantees are given by the parent company and each borrower. Security is held by a security guard, but the LMA has not established standard security and subordination documents. The mechanism is intended for investment rather than development purposes. Agree Realty Corporation is a listed Real Estate Investment Trust, which primarily engages in the acquisition and development of net leased real estate to industry-leading retail tenants….