Financial covenants in real estate finance

Real estate finance facility documentation will typically include additional financial covenants in order to monitor the value of the property against the outstanding loan, and in the case of a development finance transaction, the progress and cost of the development.

This guidance note outlines:

• • the typical financial covenants contained in real estate finance facility agreements;
• • key considerations when drafting such financial covenants;
• • when and how these financial covenants may be tested; and
• • the typical consequences of breach of a financial covenant.

See Financial covenants in real estate finance.