Hybrid Credit Facilities

Introduction

Real estate, buyout, debt, secondary and other closed-end funds ("Funds") have often used subscription-backed credit facilities—also known as "capital call" or "capital commitment" facilities (each a "Subscription Facility")—to access cash quickly, or as a bridge to capital calls or other permanent asset-level financing. Under these facilities, Lenders look to a Fund's uncalled capital commitments and rights to call capital as security for the loans and for purposes of calculating borrowing base availability. However, as Funds mature beyond their investment or commitment periods and most or all of the investor capital commitments have been funded, some Funds turn to net asset value ("NAV") credit facilities with availability based on the underlying portfolio investments of the Fund (each a "NAV Facility") for financing needs on account of the diminished borrowing availability under a Subscription Facility. While both Subscription Facilities and NAV