Situation
Trophy asset in Manhattan with a world renowned financial institution as the sole tenant. The subject property had significant exposure to acts of terrorism, with financing slated for stand-alone securitization.
Challenge
While the capital markets expected direct insurance with S&P rated carriers, the tenant insured the collateral through a non-traditional and highly complex insurance program for property and terrorism exposure. The program included a combination of conventional insurance with rated carriers, and coverage through a tenant-owned captive, self-insurance and reinsurance.
Harbor Analysis
We negotiated loan agreement terms as well as policy terms and conditions, including reinsurance agreements and cut-through endorsements, tailored to parties' objectives.
The Solution
The loan was successfully securitized, and the program was readily accepted by investors and rating agencies – with no increase to the borrower’s existing insurance limits.
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