Financial Reporting Covenant
(Mezzanine Loan Agreement) (Commercial Real Estate)

Summary

This financial reporting covenant clause is for inclusion in a loan agreement for a mezzanine financing involving commercial real estate. This clause includes practical guidance, drafting notes, and optional clauses. Mezzanine financing is a hybrid form of financing between debt and equity. Mezzanine debt typically is subordinate in priority to payment of senior debt but ranks higher in priority than equity. There are many variations on the structure of mezzanine financing. For mezzanine loans involving commercial real estate, the mezzanine loan is secured by a pledge of equity interests in an entity that owns the real property. This clause provides a financial reporting covenant that may be included in a mezzanine loan agreement between the mezzanine borrower and mezzanine lender that requires relevant reporting that includes information regarding the underlying property and the property owner/mortgage borrower. This clause is intended as a general drafting aid and will require modification according to the particular mezzanine loan agreement, including conforming to the defined terms in such agreement. For a full listing of key content covering mezzanine financing, see Mezzanine Financing (Commercial Real Estate) Resource Kit. For guidance on mezzanine financing structure generally, see Mezzanine Debt Structure and Mezzanine Lending.