Earnouts in Commercial Real Estate Loans
An earn out is an agreement by the lender to increase the loan amount at the advent of a certain event. Earn outs are structured such that the additional money can be handled by the operating performance of the property. For example, more money can be released in the form of an earn out if the property has gone through renovations, has upgraded its tenant’s minimum income criteria or increased its tenant occupancy.
Debenture in Commercial Real Estate
A debenture is a type of bond or rather a loan certificate given by a company that is unsecured and is 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.