Commercial Real Estate Finance: A Legal and Financial Guide to Interest Rate Hedging

Volatile interest rates continue to reshape the commercial real estate financing landscape, placing increasing pressure on borrowers, lenders, and securitization structures. As floating-rate debt becomes more exposed to market fluctuations, interest rate hedging tools—particularly caps and swaps—have become essential instruments for managing risk and preserving deal stability.

This advanced CLE webinar provides a practical legal and financial guide to understanding, structuring, and documenting interest rate hedges in commercial real estate transactions. The panel will unpack when hedging is appropriate, how different structures function under current market conditions, and the key risks embedded in these arrangements. With a focus on real-world deal execution, participants will gain clarity on pricing, documentation standards, and the complexities that arise when hedges intersect with existing financing and intercreditor arrangements.

Key Topics Discussed:

• Overview of interest rate risk in commercial real estate finance
• Impact of rising interest rates on floating-rate mortgage structures
• Mechanics and use cases of interest rate caps
• Structure and function of interest rate swaps
• When and why hedge transactions are employed in real estate finance
• Pricing of hedging instruments and market considerations
• Legal and commercial risks for borrowers, lenders, and securitizations
• Best practices for structuring and documenting hedge agreements
• Interaction between hedges, existing loan documents, and intercreditor agreements
• Reserve requirements and implications for refinancing and loan performance
• Risk allocation and negotiation points in hedge transactions
• Current market conditions and their influence on hedging strategy