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IRB/Tax-Advantaged Lending

Cullen and Dykman LLP has acted as counsel for both the placement agent and the letter of credit issuing bank in connection with real estate secured Industrial Revenue Bond transactions. In these types of transactions, borrowers can realize significant tax savings. A governmental industrial development agency will take title to realty, which in turn is leased by the agency to the borrower, and the agency issues bonds to finance the purchase of such realty. By having the agency take title, the property is exempt from mortgage recording tax, which can be as high as 2.80% of the principal amount of the bonds. A lending institution will issue its letter of credit to assure the marketability and repayment of the bonds, and will secure the repayment of the letter of credit with a mortgage. A placement agent will sell the bonds to investors.

The firm is also experienced in "straight lease" transactions involving industrial development agencies in New York City, Nassau and Suffolk counties. In these transactions, the agency takes title to real property and leases it to the borrower, but does not issue bonds. In these cases, the lender makes not only a direct loan to the borrower, which is secured by a mortgage from both the agency and the borrower, but also an assignment of the lease. These types of transactions are available to non-bank lenders, as well as banks, since no letter of credit is required.

We've provided these services as General Counsel in some of the following industries: BANKING

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