Pre-letting

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- Chiananda ( discussion ) 22:06, Apr. 5, 2019 (CEST)

Pre-letting defines the level of letting that is reached before the start of a construction project (exceptionally also: before completion). Since investors usually finance at least part of the investment externally ( external capital , can also be substituted by venture capital or private equity ), the internal control mechanisms of the lender take effect prior to the granting or valuation of the corresponding loan .

Unless the borrowed capital is fully secured by other security (full recourse financing), it is usually required that a certain proportion of the rental space is already rented before construction or the value date or that it is at least reserved by reliable preliminary contracts (the design of the corresponding clauses may differ in individual cases ). This proportion is usually between 60% and 80%.

In the project development practice , quite a few projects, especially large projects such as shopping centers or UEC , fail because of this hurdle. In individual cases it is controversial to what extent this can be seen as successful avoidance of later vacancies and, from the bank's point of view, as avoidance of loan defaults, or whether this prevents potentially successful projects (because in some cases letting is easier after construction has started and this can spark off).