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The lender many years otherwise realize almost every other financial remedies directly up against the borrower

The lender many years otherwise realize almost every other financial remedies directly up against the borrower

The need for mezzanine capital is growing quickly. Limit LTV percentages to possess industrial mortgages was reduced, and you can elderly lenders have tightened up their underwriting standards. [28 ] So, elderly credit is actually brief have when you’re an estimated $1.2 trillion off existing money loans in New Canaan are prepared to help you adult during the 2024 and you may 2025. Those of us consumers need certainly to refinance or deal with receiverships and you can personal bankruptcy. Mezzanine lending will have an option character while we are avoiding a credit crisis, and you will REITs could well be a significant way to obtain mezzanine capital. Yet not, of numerous REITs continues to pass up mezzanine financing for as long as this new readily available safe harbor remains in conflict which have basic mezzanine lending techniques.

The brand new Internal revenue service has actually the opportunity to assist prevent a card crisis by upgrading the fresh new Revenue Processes so you can align they that have prominent mezzanine credit methods. A commercially feasible safer harbor create draw more REITs towards mezzanine lending, and so getting far more investment to meet up with the fresh broadening need for using money. An updated safer harbor would also let standardize and you can streamline mezzanine lending techniques among REITs, which can be currently balkanized because of varying strategies and you will criteria among taxation advisors regarding lack of Internal revenue service guidance in the sync with industrial habit. As a result, this new Internal revenue service need to make the next standing into Revenue Processes. (más…)