Real estate finance—valuers and valuation provisions in facility agreements

Copyright © 2025 LexisNexis
Published by a LexisNexis Banking & Finance expert
Practice notes

Real estate finance—valuers and valuation provisions in facility agreements

Copyright © 2025 LexisNexis

Published by a LexisNexis Banking & Finance expert

Practice notes
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In a real estate finance transaction the value of the property is of utmost importance to the lender as this will be the main asset on which the loan will be secured. For this reason, valuations are required for the calculation of the loan to value (LTV) financial covenant (see Practice Note: Real estate finance—financial covenants).

Valuations are usually provided as a condition precedent to drawdown (usually defined as the 'Initial Valuation') and then periodically throughout the life of the facility.

Where to start with drafting the valuation provisions in a real estate finance transaction

The Loan Market Association (LMA) has clauses to cover these provisions in its real estate finance facility agreements—see clause 16.3 (Costs and expenses—valuations) and clause 19.15 (Representations—valuation) in each of the:

  1. •

    Single Currency Term Facility Agreement for Real Estate Finance Multiproperty Investment Transactions (LMA REF Investment Facility Agreement), and

  2. •

    Single Currency Term Facility Agreement for Real Estate Finance Single Property Development Transactions (LMA REF Development Facility Agreement),

together, the ‘LMA REF Facility Agreements’.

The

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Jurisdiction(s):
United Kingdom
Key definition:
Estate definition
What does Estate mean?

The means by which land is owned in England and Wales.

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