ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
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 REIFs or corporate vehicles like joint stock companies with variable or fixed capital (SICAVs or SICAFs). An additional financing scheme is represented by real estate securitisations. Special purpose vehicles (SPVs) 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 these assets. Some provisions have entered into force in Italy introducing new alternative lending (ie, entities can operate in the Italian market without requir - ing a banking licence), such as: • the EU alternative investment funds (EU AIFs) which carry out investment activities in receivables in Italy; and • the SPV that can grant financing to certain borrowers under conditions provided by Law No 130/1999 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 the: • mortgage; • assignment of rental receivables; • assignment of due diligence report receiva - bles; • assignment of construction contracts receiva - bles;
• assignment of hedging agreements receiva - bles; • pledge over the corporate capital of the bor - rower; • pledge over the shares of the borrower; • pledge over the units of the borrower; • pledge over the borrower’s bank accounts; • assignment of receivables under other con - tracts or of insurance proceeds; • loss payee clause in connection with any insurance policy (other than covering third- party risks); • equity commitment agreement; and • 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 trans - action, it needs to receive some corporate benefits. • The 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 security is valid, the lender needs to identify any concerns regarding corporate benefit and ensure that the situation is properly addressed. • The fund’s units may be pledged in line with Article 2784 of the Italian Civil Code. • For registered notes, an entry in the issuer’s register of unitholders, held by the manage - ment company, is necessary. • A pledge over dematerialised units is also allowed.
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