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    Construction (Finance)

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  • Negotiation and drafting of agreements, contracts, documents, firms and templates related to various aspects of construction finance transactions, such as: acquisition and development loan (ADL); administrative services (ASA); build-rent-transfer (BRT); build-operate-deliver (BOD); build-operate-lease (BOL); build-operate-transfer (BOT); build-own-operate (BOO); build-own-operate-subsidize-transfer (BOOST); build-own-operate-transfer (BOOT); collateral warrantee (CW); comfort (assurances) letter (CL); common terms (CTA); concession agreement (CA); consent to collateral assignment; construction agreement (CA); construction loan (CL); design-build-finance (DBF); design-build-finance-operate (DBFO); design-build-operate-maintain (DBOM); direct agreement (DA); equity contribution (ECA); finance lease (FL); finance-build-own-operate-transfer (FBOOT); general partnership (GP); guarantees (such as completion, cost overrun, payment, performance, project); hedging instrument (HI); indemnity agreement (IA); installation agreement (IA); intercreditor (IA); joint operating (JOA); joint venture (JVA); license agreement (LA); limited liability company (LLC); limited partnership (LP); management agreement (MA); master agreement (MA); master guarantee (MGA); offtake agreement (OA); operation and maintenance (OMA); participation agreement (PA); payment bond (PB); performance bond (PB); power purchase (PPA); pre-development (PDA); project development (PDA); project financing (PFA – such as cost-share or low-interest financing, debts financing, equity financing); project loan (PLA); promissory note (PN); public-private partnership (3P or PPP); security trust (STA); shareholder/sponsor (SA); security documents (SD); shareholder/sponsor support (SSA); ship-or-pay (SOP); sole-supplier (SSA); surety bond (SB); special purpose vehicle (SPV); take-or-pay (TOP); technology license (TLA); through-put (TPA); tripartite deed (TA); turnkey construction (TCA).

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  • Experience with construction loans for various types of projects, such as: commercial office buildings; hospitals (such as: acute care; clinics; critical access; district; general care; medical office buildings; regional; specialty; teaching); hotels; industrial parks; master planned communities (MPCs); mixed-use developments (MUDs); multifamily residential buildings (for condominiums and rental units); planned unit developments (PUDs); shopping centers; solar power facilities; wind farms.

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  • Experience with various types of alternate construction financing, such as: accounts receivable financing (in which a financial institution requires a contractor to pledge all accounts receivables as collateral for a loan from such bank); bank guarantee; bridge loans (both closed and open); commercial mini-perm loan (hard-money and soft-money); commercial mortgage bridge loan (CMBL); equipment financing; factoring (in which a factor company actually purchases a contractor’s invoices at a discounted rate); floating-rate debt for new construction (combining construction and permanent financing with a forward-starting swap, resulting in floating interest rates during the construction period and a synthetic fixed rate during the permanent financing period); franchise exclusive lending programs (by franchisor hotel chains for franchisee operators of the franchised hotels); gap funding; private placement 144A bonds; letter of credit (LOC); mezzanine construction loan; overdraft facilities; private money loans; purchase order financing (in which a financial institution advances funds to a contractor only for the purpose of fulfilling only the terms of the subject purchase orders, secured by anticipated revenue the contractor expects to receive once the work for which the subject purchase orders were required is completed); project financing; restructuring; sale-leaseback; Small Business Administration (SBA) CDC/SBA 7a, 504 and Energy Efficient 504 loan programs; syndicated (a/k/a “club”) loans; takeout loans; term B loans; tripartite deeds (a/k/a consent deeds, direct agreements or side agreements – between lenders, parties and counterparties, giving the lender direct rights of action to remedy any default).

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  • General financing experience, such as: acquisition; community development; conduit; convertible loan; debt securitization; foreclosure; letter of credit (LOC); mezzanine; mixed-debt; permanent; repossession; revolver; subordinated; tax exempt; term; warehouse; workout.

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  • Project financing may be one of the financing mechanisms used for large-scale construction projects, in which a lender advances funds to a borrower (generally a special purpose entity – SPE – or special purpose vehicle – SPV) for a project, with the expectation that such borrower shall repay the principal and interest for such funds from the revenue generated from the project, but if no revenue is generated, the borrower is not personally liable to repay anything to the lender.

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  • Experience with public-private-partnership (3P or PPP) agreements, in which a governmental entity contracts generally with a special purpose entity – SPE – or special purpose vehicle – SPV – to provide the construction expertise (generally through some form of engineer-procure-construct – EPC – contracts with third-party subject matter expert – SME – entities) required to design, implement and operate a large-scale infrastructure project, while either the governmental entity (perhaps through the issuance of bonds) or the SPE/SPV (perhaps through various non-recourse or recourse funding arrangements with third-party lenders or corporate guarantees, depending upon the capitalization of the SPE/SPV) may provide some or all of the required financing, in return for which the SPE/SPV will receive all the revenues generated by such project for a set period of time, after which the SPE/SPV will transfer the ownership and control of the completed infrastructure facility to the governmental entity, perhaps in exchange for some final consideration granted to the SPE/SPV by such governmental entity.

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  • Experience with the contract financing provisions pursuant to Federal Acquisition Regulation (FAR) Part 32 and the FAR 52.232-16 progress payments clause.

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  • Experience with design-build-finance (DBF) construction agreements, in which the short-term financing of all or a portion of the project is assumed by the private sector, allowing sponsors to further the construction of the project prior to assembling all the required construction financing, which may be convenient if the design-builder provides the short-term gap financing for the project, while the sponsor promotes the implementation of the project.

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  • Recommendation that if reinsurance is to be part of the loss mitigation scheme for the project, it may be advisable for the principal insurer to execute an assignment of any reinsurance proceeds to the project company or SPE/SPV, thus ensuring that any such reinsurance proceeds may be from the principal insurer’s estate in the event of a bankruptcy.

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  • Recommendation for borrowers to carefully check any recent loan documents proposed by lenders for provisions discussing “material adverse changes” or “material adverse effects”, which often stipulate that a condition precedent to the next progress disbursement of the loan is that no such material adverse change or material adverse effect shall have occurred after the last such progress disbursement, and then classify (either expressly or implicitly, whether in that particular loan provision or elsewhere in the loan document, such as in the “Definitions” or “Force Majeure” provisions) any occurrence of COVID-19 as either a material adverse change or material adverse effect.

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  • Other loan provisions that may be relevant to the impact of COVID-19 may be: financial covenant provisions (relating to statement in the construction loan requiring the borrower to maintain a fixed schedule, or presale of a particular number of units at each milestone or other metrics specified as conditions precedent to receiving the next loan progress payment); loan balancing provisions (requiring certain deposit levels must be maintained by borrowers to assure the lender that the project will be completed on schedule, despite any COVID-19-related shutdown orders from governmental entities); representations and warranties provisions (which require the borrower to make certain affirmative written statements about the condition and progress of the project, as a condition precedent to receiving the next loan progress payment).

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  • Legal support for bond counsel, co-bond counsel, issuer counsel and underwriter’s counsel in various bond transactions, such as: economic development bonds; general obligation bonds (GOBs – both with and without full faith and credit); green bonds; industrial revenue bonds (IRBs); revenue bonds (RBs); school bonds.

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  • Performance of typical financing-related legal tasks, such as: analyzing the funding options presented; compliance due diligence; drafting authorizing resolutions; negotiating and documenting project financing terms; negotiating and securing letters of credit (LOCs); preparing all grant and loan applications and documentations; preparing and negotiating various security vehicles (such as mortgages and UCC filings); presenting proposed projects to individuals, financing institutions and syndication groups to obtain financing for the project; presenting proposed projects to public entities to obtain bond resolution approval; restructuring private and public financing.

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  • Familiarity with various international development and financing agencies for large-scale projects, such as the: African Development Bank (AfDB); Asian Development Bank (AsDB); Commonwealth Development Corporation Group Plc (CDC Group Plc); European Bank for Reconstruction and Development (EBRD); European Investment Bank (EIB); International Bank for Reconstruction and Development (IBRD); International Development Association (IDA); International Finance Corporation (IFC); Multilateral Investment Guarantee Agency (MIGA); World Bank (WB).

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  • Familiarity with the potential harms that should be covered by the appropriate insurance types and limits during the construction phase of a project, such as: auto and vehicle liability; builder’s all risk; business interruption; employer’s liability; environmental liability; errors and omissions; physical damage to ancillary site facilities; physical damage to installed equipment and fixtures; physical damage to the project facility; professional liability; third-party liability; transportation insurance (covering air, land and water shipments of goods and materials to the project); workers’ compensation.

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  • Familiarity with 1031 exchanges pursuant to Internal Revenue Code Section 1031, under which a taxpayer exchanges real estate held for investment or for use in a trade or business, whether immediately or in a deferred exchange (a/k/a “Starker Exchange”) for either cash or real property of like kind and then uses the funds to acquire replacement property.

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  • Familiarity with Islamic financing arrangements (which under Sharia law must be completely free from maisir – speculation – and gharar – uncertainty – and may not involve investments related in any way to alcohol, drugs, gambling, or any other activity prohibited by Sharia law), such as: istina (a specific type of construction financing that may be used during development phase of the project); ijara (lease financing that may be used during operational phase of the project); murabaha (an advance payment contract arrangement in which a purchaser pays a middleman to acquire an asset at a fixed price, with a fixed profit margin); musharaka (a profit-sharing arrangement between 2 or more parties who contribute funds to finance a project and to share the risks pursuant to pre-defined percentages); sukuk (similar to bonds) which allows for the co-ownership of the revenue-producing resources (which are the underlying assets for the sukuk), so that the income to the sukuk-holders is generated by the actual underlying business activity for which the sukuk had been issued, and is thus considered profit rather than interest under Sharia law.

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  • Familiarity with various interest rate risk management strategies, such as: cash flow matching; caps; collars; convexity matching; duration matching; forward rate agreements; embedded options; floors; forward rate contracts; futures contracts; interest rate swaps; options; swaptions; various duration bonds.

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