Covenants in real estate acquisition facilities

In a real estate acquisition finance transaction, covenants are designed to preserve the value of the property against which the lender is advancing the loan. The finance documents will include both positive and negative (or restrictive) covenants, which impose obligations on the borrower to keep the property in a good state of repair and to limit the borrower’s use of the property. Many of the usual covenants (also referred to as undertakings) for a typical bilateral or syndicated loan facility will also be applicable to a real estate acquisition finance transaction.

The guidance note looks at the additional covenants (including property-specific, information and financial covenants) which may apply in a real estate acquisition finance transaction.

See Covenants in real estate acquisition facilities.