Real EstateFrom the largest, most sophisticated global fund managers to local developers -
Bottom-line - you are in the best hands with Riverside as your trusted partner and advisor.
Experience matters. With Riverside, you will benefit from the advice of highly respected, seasoned derivative professionals who have hands-on experience and deep expertise managing interest rate and currency risk, not only as advisors, but also as principals at major financial institutions. There is no other advisor that has the experience of Riverside’s professionals, especially on more complex transactions. Be assured that you will get the attention of our senior team members.
Understanding the underlying risk in real estate finance, structuring the right hedge and choosing the best execution strategy are important. With Riverside as your partner, you can be confident that you will be in the best position to make the most informed hedging decisions and negotiate dealer execution costs.
Interest Rate Hedging
Banks often require an interest rate hedge as part of your financing. Effectively managing interest rate risk goes far beyond the quick execution of the generic hedge that your lender requires. Developing a solid risk management framework and choosing the appropriate hedge that is right for you can reduce costs and add value to your investment. Furthermore, credit charges on your swap transactions can be very high. Given our deep experience in the market, formerly as principals and now as advisors, we are able to negotiate on a peer-to-peer basis with your dealer banks resulting in best execution.
Many developers face currency risk from the time they sign a purchase agreement to buy an asset, through the hold period and until the ultimate sale of the property. Foreign exchange hedging can be expensive and highly complex, not only in more liquid G10 currencies, but especially in emerging markets.
By working with Riverside, you benefit from the following:
- We work with you to determine your targeted risk metric, such as DSCR, IRR or a change in cash flow.
- We help identify the best hedge strategy to meet your goals.
- Value is not left on the table. We introduce efficient interest rate structures, such as step-up caps, leaving more value in your pocket rather than the dealers.
- When reviewing your credit agreements, we make sure that the hedging definitions and requirements accurately reflect the intent of the hedge transactions and are commercially reasonable.
- When reviewing your ISDA documents, we introduce concepts of transparency and fair play to achieve a more balanced and commercially reasonable framework for hedging.
- We work closely with your controllers and auditors and provide accounting and valuation support throughout the life of the hedge.
- We assist in the time consuming process of KYC and AML approval with your dealers and fulfilling the ISDA protocol requirements.
- Importantly, we make sure you get the best execution with your swap dealers, helping you save transaction costs.