This two-part series examines several significant aspects of “syndicated” and “participated” commercial real estate loans. The first installment provided a primer on the important features of syndicated loans. This final installment focuses on loan participations and provides a summary of the key differences between these two constructs.

The Participated Loan

While the terms “participation” and “syndication” are often used interchangeably by banking professionals, there are significant legal and practical differences between the acquisition of a “participation interest” or a “share interest” in a loan. It is important for a lender—and a borrower-sponsor—to be aware of the differences between these structures in order to determine which structure best fits the parties’ goals, interests and risk profile, even if the underlying investment is the same in either case.

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