Project finance
Project finance transactions are tailored to meet the specific requirements of large-volume investment projects for which traditional financing methods are insufficient. Such transactions are characterized by the following features:
- the loan is repaid primarily from future cash flows operating activities of the borrower which is the main focus of the credit analysis
- projects risks are shared by various partners
- long-term financing
- the bank syndicate generally assumed all available assets and contractual rights as security
Real Estate Financing is financing of construction, reconstruction or investment in Real Estate which afterwards is offered for sale or renting. The major distinguishing characteristic of Real Estate Transactions from other loan transactions of corporate clients is: real estate property itself is the main source of cash flows for loan repayment and collateral.
- Construction loan- loan with purpose of financing of real estate assets. Under such loan disbursement is allowed in line with construction progress against presentation of invoices. Control both of construction cost and construction progress by project monitoring agent is necessary. Construction risks shall be properly insured.
- Investment loan- loan with purpose of financing of a completed real estate assets with no construction risk.
Acquisition and leveraged financing are characterized by higher degree of leveraging than for standardized lendings. Typically such financings have a term of 5-7 years and the structure may also include mezzanine or subordinated debt financing. The source of repayment is the cash flows of the target company and/or of the consolidated company.
