BARBRI Webinar – Ground Lease Financing: Addressing Friction Points to Meet Lender Demands
Herrick Real Estate partner, Patrick J. O'Sullivan, Jr., will present a Ground Lease Financing CLE with BARBRI to examine advanced strategies for adapting outdated or inadequate ground leases to current leasehold lending standards. The panel will address lender protections, underwriting obstacles, complex deal structures, fee mortgage conflicts, and closing considerations, including title insurance and legal opinions.
Ground leases serve varied purposes, from urban renewal and nonprofit property arrangements to reducing developers' land acquisition costs and facilitating sale-leasebacks. Although their long terms and complexity are a deterrent, ground leases are used very effectively in today's market. However, ground leases require careful legal counsel and revisiting for deal and financing adjustments.
Oftentimes in practice, ground leases are presented for financing having been drafted years - sometimes decades - before a financing or refinancing effort. In these instances, the ground lease is often drafted without consideration of a future mortgage of the ground lease and critical lender protections are absent. It is also very common for financing efforts to encounter unique transaction structures or ground leases that require adjustments in order for underwriting to proceed. Sometimes ground leases may work during construction but then present problems during a refinance, sale, etc. Given market changes and client adaptation needs, it is important for practitioners to have sophisticated and creative solutions in their toolbox to adapt dated or inadequate ground leases to meet today's leasehold lending standards.