What is a Debenture as it Pertains to Commercial Real Estate?
A debenture is a type of bond. More precisely, it is an unsecured loan certificate given by a company and supported by credit rather than collateral or physical assets. Debentures rely solely on the creditworthiness of the issuer. Like other bonds, debentures are noted in an indenture.
Debentures are one of the most common forms of long term loans and are usually accompanied by a fixed interest rate. Some debentures are even convertible. This means that after a certain period of time, they can be converted into equity shares of the company that issued the debenture.