How Do I Lend To LPs & REITs?

Loan transactions commonly involve non-corporate entities such as limited partnerships and Real Estate Investment Trusts ("REITs"). It is important for lenders to understand how they should modify their practices and procedures when dealing with such entities.

Limited partnerships typically consist of a general partner (although there can be multiple general partners) and one or more limited partners. Business is carried on through the general partner who is liable for all of the obligations of the limited partnership. Limited partners, on the other hand, are typically only liable for the amount of money they contributed to the limited partnership. A lender to a limited partnership will therefore have recourse against the assets of the limited partnership, but not against the limited partners themselves. To establish the general partner's authority to bind the limited partnership, the lender should review the limited partnership agreement to confirm that