In one sentence
A repurchase agreement financing arrangement funding an originator's or investor's holdings of loans or securities.
The longer version
Repo facilities finance loan and securities inventory through sale-and-repurchase mechanics, common among mortgage REITs and debt funds. They provide leverage against the assets held.
Repo and warehouse financing sit beneath the visible deal, shaping how debt funds and originators fund their lending.
Common questions
- What is a repo facility in commercial real estate?
- A repurchase agreement under which a lender buys loans from an originator or debt fund and agrees to sell them back later, effectively financing the loans.
- Who uses repo facilities?
- Debt funds and mortgage REITs, to leverage their portfolios of bridge and transitional loans.
- What is a margin call on a repo facility?
- A demand for cash or collateral when the value of the financed loans falls, which is a key risk of repo financing in a downturn.
Keep reading
- Loan participations: a working guideLead and participant, document flow, ongoing obligations.
- The commercial loan closing processThe five stages from term sheet to funded.
- How life companies run commercial mortgage operationsThe long servicing tail.
- Commercial loan softwareWhere this sits in the lending stack.