Financing Process

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Detailed evaluation for the appropriate financing structure

In the pre-evaluation phase for the financing of real estate projects, the following information is requested about the project.

  • General information explaining the real estate (Location, rentable space, number of rooms etc.)
  • Feasibility study of the project
  • Market report prepared by and independent advisor  (Competition and market analysis in regards to the location of the project)
  • Anticipated capital expenditures and their details
  • Future cash flow projections of the project including details of underlying assumptions Information regarding the financial strength of the investors
  • The progress status of the project and legal framework (required permits, documents)
  • Other additional information on a project basis

Following pre-evaluation to determine the suitable financing structure, including capital contribution, term of loan and security package, the results are conveyed to the parties. After an agreement is reached, the credit procedures are completed, the loan agreement is prepared and financing is realized.

Repayment of loans provided in real estate projects should be primarily based on rental revenues. Accordingly, financing structures that include thresholds regarding rental contracts from the start of the construction phase are preferred.

Common components of the security package of a real estate project include:

  • Pledge over the shares of the project company
  • Lien on the project land and real estate constructed on it
  • Pledge over the accounts of the project company
  • Assignment of all revenues of the project company including rental income

Additional security may be requested on a project basis.

 

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