An equity kicker is a clause included to a loan agreement in the field of lending for commercial real estate that gives the lender a stake in the real estate or a share of future earnings in exchange for more lenient loan terms. When it comes to refinancing retail loans in a high-interest rate climate, this option can significantly alter the situation.
When your retail loan matures, an equity kicker enables you to bargain with your lender to incorporate it in the new loan deal. The lender might provide a reduced interest rate or more accommodating repayment conditions in exchange for a share of your property's potential future earnings or equity, making it easier for you to refinance your retail property loan.
Because it matches their interests and motivates the lender to support the borrower's success in their retail property venture, this strategy can be advantageous to both borrowers and lenders. Refinancing your retail loan in a high-interest rate environment might be made more bearable and less stressful by using an equity kicker. Investigate the potential of equity kickers if you're thinking about refinancing your retail loan, but are worried about high interest rates. Ask us at marcperlof@gmail.com if this plan is appropriate for you.