Repayment Risks and Covenants
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In this 8th and final course of the Commercial Real Estate Underwriting Skill Series, participants will review projections, assess income property documentation, identify borrowing causes and repayment risks, evaluate loan arguments, consider SPE impact on credit decisions, and review essential credit write-up issues.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
In the eighth and final webinar session, participants review the fundamental differences between description and analysis in assessing and interpreting projections. They examine documentation relevant to the income producing property. They identify the projected borrowing causes, likely cash sources of repayment, risks to the cash repayment sources, and practical mitigants to repayment risks for the borrower. They assess the most persuasive arguments in support of the loan request and the most persuasive arguments opposed to the loan request. In addition, participants examine the impact on the credit decision if the owners were to create a special purpose entity (SPE) to house the proposed acquisition. As a final step in bringing closure to the Credit College, they review the four essential analytical issues that must be addressed in every credit write-up.
Who Should Attend
This Course is ideal for participants currently in or aspiring to enter the following job functions:
- Credit Management
- Commercial Real Estate Administration
- Commercial Loan Portfolio Management
- CRE Lending
- Private Banking
- Loan Review
- Construction Lending
- Credit Analysis
Prerequisites
Familiarity with accrual financial statements and accrual financial statement terminology for a commercial real estate operation, as well as completion of prior sessions in the Credit College.
Objectives
By the end of the webinar session, participants will be able to:
- Identify documentation necessary to determine the quality of the subject property as well as assure lender access to the subject property and its stream of income in the event of default.
- Identify the projected borrowing causes, likely cash repayment sources, risks to the cash sources of repayment, and practical mitigants to those risks.
- Assess a range of arguments in favor of the loan request and a range of arguments opposed to the loan request, based on the analytical conclusions for the borrower.
- Identify the single most persuasive argument in favor and the single most persuasive argument against the loan request.
- Assess the likely impact on the credit decision if the owners were to create a single purpose entity (SPE) to house the proposed acquisition of the apartment complex.
- Implement the analytical decision process and state the rationale and critical importance of each of the four analytical essentials that every credit write-up must address in reaching a credit decision.
Materials(access provided with registration)
- Credit Refresher on Non-Financial Red Flags
- Terms and Concepts - Business Organizations
- Reference Guide on Loan Covenants and Risk Mitigants
- Excerpts from Sequoia Properties Credit Narrative
- Solutions for Session 7
- Exercise for the Session 8 Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 8 of 8 in the Commercial Real Estate Underwriting Skill Series
The CRE Analytical Process and Credit Write-Up
Borrower Cash Flow, Ratio Analysis and the First Way Out
Personal Cash Flow, Guarantor Analysis and the Second Way Out
Appraisal Reports and Assessing Market Value
The Income Capitalization Approach and the Cap Rate
Underwriting Standards, NOI and Breakeven Analysis
Management Assessment, Competitive Forces, and Projected Performance
Repayment Risks and Covenants
