Dictionary of Real Estate Terms: takeout financing
takeout financing
a commitment to provide permanent financing following construction of a planned project. The takeout commitment is generally predicated upon specific conditions, such as a certain percentage of unit sales or leases, for the permanent loan to "takeout" the construction loan. Most construction lenders require takeout financing.
Example: Young, a developer, applied for a construction loan on a small office building. The construction lender requires Young to obtain takeout financing in the form of a commitment from a permanent lender. The takeout loan will be granted following construction and leasing of at least 65% of net rentable area to creditworthy tenants.
