A/B Tranching of Commercial Real Estate – Secured Loans: An ...

Identity of the B Participant/Transfer Restrictions
applicable to the B Participant
• If the A/B arrangement is structured in relation to a syndicated loan:
• B holder’s transfer rights track the arrangements that apply to lenders
generally.
• B holder may have relatively unfettered rights to grant ―mere‖
participation interests to parties that will not have privity with the
borrower.
• For a ―true‖ assignment (novation), B holder is required to obtain the
consent of the administrative agent for the lenders, and to comply with
other restrictions (which may include a consent from the borrower).
• The consent rights of the administrative agent or the borrower may be
limited if the proposed assignee is a financial institution or other ―eligible
assignee‖ that complies with certain suitability tests.
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