Conduit (CMBS)
Note: Current Credit Crisis Conditions have made this program a consideration only on Higher Quality Properties having consistent histories in stable markets with solid fundamentals. Current Rates are now at 2.50% over the 10 Year Swap Rate on loans over $5 Million and up to $40 Million. (See Rates) If Non Recourse is absolutely necessary, with higher leverage, this loan will be quite competitve in the current environment with signs that credit markets are improving.
CMBS = Acronym for Commercial Mortgage Backed Securities
Conduit Loans provide the lowest rates possible for income producting properties and are very
much in favor among investors borrowing over 2 Million dollar loan amounts. Loans can
be
slightly taylored to your individual needs. These loans are non-recourse, except for standard
carveout provisions for dishonesty or environmental negligence. These type loans came
about
in the early 1990s as a result of the "The Resolution Trust Corporation" cleaning up
the
Savings and Loan mess with non performing Real Estate loans and the need to
provide capital.
These loans have a Treasury Defeasance or Yield Maintenance Pre-payment
penalty. Conduit
loans do require legal council experienced in real estate. They also require
a Single Property
Entity or multiple properties under one mortgage obligation. NOTE: Current Market Conditions with
the Credit Crisis, has made this loan not the best fit on smaller loans. Please Call.
LOAN
SIZES
Minimum is $5,000,000 - Maximum Unlimited
Terms
- 5, 7
& 10 Year Fixed Terms with up to 30 Year Amortizations
- 3
year interest only structures available
- Assumable for a 1% fee
- 80% LTV (No Secondary Financing Permitted at any time)
- Debt Service Coverage Ratios 1.20 to 1 (Rents Underwritten to Market)
- 60 Day Locks Available for a Good Faith Deposit
BENEFITS
-Low Rates
-Assumable
-Can be defeased resulting in a Discount to payoff
-Yield Maintenance Prepayment Penalties Available
-Flexibility in Terms
-Low Debt Service Ratio Requirment
-30 Year Amortizations
-10 Year Fixed Periods
-Interest Only Availablity
-Non-Recourse
-B and C Grade Properties are a Great Fit
-220 - 250 Basis Points over the 10 Year Treasury (Lower Pricing on Larger Loans)
-Loan Provisions & Document Language Negotiable
-Loan Structures available for non-performing properties or properties
that would benefit in their sub-market using "Earnouts or Interest Holdbacks"
Factors that Effect the Conduit Loan Rate Spread over the 10 Year Treasury |
|
Property Cash Flow (DSCR)
Economic Factors
Sponsor Strength/ WeaknessCapital Markets Spread Pricing
|
Property Quality
Loan-to-Value (LTV)
Loan Size
Loan Term
Tennant Strength/Weakness
|
|
|
Please Note: These Rates have Drastically Increased with the on-going Credit Crisis and this pricing spread are only to be used as a barometer for this type of Financing which currently MAY NOT be your Best Loan. Please Call Us
| Conduit Loan Program |
Fixed Term |
DSC |
LTV |
Spread over 10 Year Treas. |
|
| Apartment |
5-10 Years |
1.20 |
80% |
290-330 |
|
| Hotel - Full Service |
5-10 Years |
1.25 |
75% |
340-370 |
|
| Hotel - Lim. Service |
5-10 Years |
1.35 |
70% |
340-370 |
|
Industrial |
5-10 Years |
1.25 |
80% |
335-370 |
|
Mobile Home Parks |
5-10 Years |
1.25 |
80% |
325-355 |
|
Office Building |
5-10 Years |
1.25 |
80% |
295-325 |
|
Retail |
5-10 Years |
1.25 |
80% |
290-320 |
|
| Unanchored Retail |
5-10 Years |
1.25 |
75% |
305-335 |
|
| Weak Anchored Retail |
5-10 Years |
1.25 |
80% |
298-328 |
|
| Self Storage |
5-10 Years |
1.25 |
80% |
330-360 |
|
| Anchored Shopping Center |
5-10 Years |
1.25 |
80% |
290-320 |
|
| Warehouse |
5-10 Years |
1.25 |
80% |
306-336 |
|
|
|
|
|
|
|
CONSIDERATIONS
How long will you own the property? Low Rate Loan Could be Assumed during loan term enhancing the property's value
Cost Benefit of Loan Costs Versus other Lower Cost Loans
Third Party and legal fees of at $18,000 before Title Insurance
Requires Legal Representation from Borrower's Council
