Real Estate Financing

Key Principal

Definition

Key Principals (KPs), also referred to as Guarantors, are individuals or entities involved in non-recourse commercial loans, particularly with Agency lenders such as Freddie Mac and Fannie Mae. They serve as additional parties responsible for meeting specific criteria, including past experience, net worth exceeding the loan amount, and certain liquidity thresholds, to qualify for agency loans.

Use Case

n a real estate syndication seeking an agency loan, the sponsors of the deal are typically considered KPs due to their experience. However, if they fall short of meeting the net worth or liquidity requirements, additional KPs can be brought in to fulfill those criteria.

Glossary Categories

Explore more commercial real estate definitions, use cases and terms.
Documentation Glossary Image
Due Diligence Glossary Image
Financials Glossary Image
Investing Basics Glossary Image
Real Estate Financing Glossary Image
Real Estate Strategies Glossary Image
Regulation Glossary Image
Taxes Glossary Image

Ready to see how it works?

Request Demo
Join the GPs getting ahead of the curve