Working Capital from Real Estate

“Many companies own the land and buildings necessary to conduct the day-to-day operations of their business. Oftentimes this valuable asset is included in traditional bank financing packages as the cornerstone of the credit facility. As long as the business progresses as the bank deems appropriate, and all loan and debt service coverage covenants remain in compliance, the working capital from real estate will serve to anchor the lending relationship.

Working Capital from Real Estate

Companies and/or individuals may also own commercial real estate… [This] may provide an income stream or conversely, suffer from under-utilization and needed development. [The banking community typically finances] these transactions as a “onetime” advance which is conditioned for certain renewal requirements… Additional funding is triggered by developmental thresholds that have to be met. [In addition,] the investment opportunity associated with these properties may require balance sheet leverage beyond what the bank is willing to tolerate…”

More at WikiCFO.com

If you want to take your financial leadership skills to the next level, then click below to learn more.

Working Capital from Real Estate

, , , , , , , , ,

No comments yet.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.