Just got a term sheet that uses the term "release price" that is "up to" a certain $/SF amount. This is in regards to additional funding for TI/LC's.
Wondering if this is a common phrase for these terms. In context, it appears that the lender will commit their percentage of future TI/LC funding, but only UP TO said release price.
I usually understand the phrase as a floor, in say, a construction loan. Where the release price would be a minimum amount pre-approved by a lender to sell, say one unit of an entire project.
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The only time I've seen the actual phrase "release price" is from a lender with condo units (under development) as collateral, never for TI/LCs of a commercial project (and I work in commercial).
The way I understand this term sheet is that they probably don't want you spending a disproportionate amount of TI/LC money for one unit and neglecting the others. It's probably a mechanism they believe will keep the project balanced and will supposedly save you from cutting expensive deals to any particular tenant. Depending on the type of project you have, you'd probably want to make sure you have some leeway (assuming you have variety in your tenants, say a restaurant vs. soft goods tenant in a retail project).
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