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Some lenders seek the opportunity to participate in great projects by structuring their debt as a participating loan allowing them to financially participate in the project's success - this is also known as an "equity kicker".
In exchange for a participation option, it is sometimes possible to negotiate a lower upfront interest rate or other flexible terms favorable to the project sponsor. In other situations, a participating loan may be the best deal for two parties who are trying to achieve goal alignment or contribute various operational synergies to a project.
Some participating loans are fully convertible into equity and can also contain a buy/sell agreement which can serve as an exit strategy for the developer. Each situation is different and requires a careful and detailed understanding of each party's objectives prior to pursing a specific financing strategy.
Please contact us to discuss your specific situation.
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