ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
• the mortgage; • the assignment of rental receivables; • the assignment of due diligence report receivables; • the assignment of construction contracts receivables; • the assignment of hedging agreements receivables; • the pledge over the corporate capital of the borrower; • the pledge over the shares of the borrower; • the pledge over the units of the borrower; • the pledge over the borrower’s bank accounts; • the assignment of receivables under other contracts or of insurance proceeds; • the loss payee clause in connection with any insurance policy (other than covering third- party risks); • the equity commitment agreement; and • the subordination agreement. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are different restrictions on granting secu - rities in the context of a real estate financing transaction. If a company enters into a financing transaction, it needs to receive some corporate benefits. Such transaction must be considered on its merits and the corporate benefit in granting the security must be assessed in the context of that transaction. To ensure that any guarantee or third-party secu - rity is valid, the lender needs to identify any con - cerns regarding corporate benefit and ensure that the situation is properly addressed.
Commercial real estate purchases are gener - ally financed through bank loans, although the number of real estate financings granted by non- banking institutions has increased significantly. In the real estate market, investors can partici - pate in commercial real estate through contrac - tual vehicles like real estate investment funds (REIFs) or corporate vehicles like SICAVs and SICAFs (joint stock companies with variable or fixed capital). An additional financing scheme is represented by real estate securitisations. Special purpose vehicles meeting certain requirements can carry out securitisation of proceeds arising from the ownership of real estate and registered movable assets as well as other rights in rem or personal rights over such assets. In recent years, some provisions have entered into force in Italy introducing new alternative lending (ie, entities can operate in the Italian market without requiring a banking license). There are two types of alternative lending: (i) the European alternative investment funds (EU AIFs) can carry out investment activities in receiva - bles in Italy; while (ii) the special purpose vehicle (SPV) can grant financing to certain borrowers under conditions provided by Law No 130 of 30 April 1999. 3.2 Typical Security Created by Commercial Investors Italian real estate finance transactions are assisted by an extensive security package that includes:
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