Bridge financing are all types of flexible short-term financing strategies that may have a challenging and / or complex component to the transaction. Commercial Capital Partners ability to provide this type of financing enables the borrower with the necessary time frame for the properties to be repositioned and stabilized, at which time a longer-term loan will be provided to pay-off the Bridge / Renovation loan. The duration of these loans typically ranges from six (6) months to five (5) years. Bridge lenders may be willing to underwrite to lower debt-service-coverage ratios (DSCRs) and lend on higher loan to costs (LTC). They do this when they believe that the borrowers’ business plan will increase the revenue from the property and increase the DSCR in future years.
Mezzanine debt (also called subordinate debt) is a structured financing product used to increase leverage. It is generally higher risk than senior debt, and therefore demands higher returns. Mezzanine debt can be secured by a second trust deed, and is therefore subordinate to the senior mortgage, but primes any equity. Mezzanine loans may also be secured by a pledge of partnership interest in the ownership entity. Unsecured mezzanine is treated as preferred equity. Mezzanine financing is limited by ratios based on the combined senior and subordinate debt. The most important of which include loan principal to property value (LTV), and annual net operating income to annual debt service (DSCR). Subordinate lenders accept some minimal risk to their principal balance, and may be willing to accrue some portion of their interest payments. There are numerous Mezzanine and Preferred Equity structures.
Permanent / Fixed Rate Financing is the core product that is utilized most throughout the commercial real estate industry. Permanent loans usually enjoy the lowest interest rates, longest terms, and longest amortization schedules. Commercial Capital Partners works with Banks, Life Companies, Credit Unions, REIT’s, Debt Funds, Fannie Mae, Freddie Mac and more to supply the most diverse array of permanent solutions for their clients.
CMBS conduit loans are conventional fixed-rate, first mortgage loans secured by stabilized income-producing commercial real estate properties that are leased to tenants. Once closed, CMBS conduit loans are pooled together by Wall Street investment banks and sold as securities to investors. The borrower is not involved with this process. The market for CMBS conduit loans started in 1992. The industry peaked in 2007 when $228 billion of CMBS conduit loans were originated in the United States. More recently, the annual volume of CMBS conduit loans closed is $75-$100 billion/year, representing roughly 20% of all commercial loans closed annually in the United States. The CMBS conduit loan market is a significant source of financing for income-producing real estate. CMBS loans are non-recourse with loan amounts starting at $2MM.
FHA is a federally guaranteed program under the government’s Department of Housing and Urban Development (HUD). FHA Loans can be used for the purchase/refinance as well as the construction/ substantial rehabilitation of multifamily or healthcare properties. Loans are non-recourse (except standard carve-outs) and rates are very competitive with 35-40 year fixed terms and amortizations. FHA are available nationwide and are available for any market (primary, secondary, tertiary). Because of the longer diligence/underwriting period and closing time of FHA mortgages, we can arrange for a well-priced, short-term bridge loan with minimal fees until closing if necessary.
The Small Business Administration (SBA) was created in 1953 as an independent agency of the US government to protect the interests of small businesses, preserve competitive enterprise, and strengthen the economy. The SBA helps small business owners remain the engine of the United States by offering higher LTVs and lower DSCRs than most conventional loan products. These programs are operated through private-sector lenders that provide loans which are, in turn, guaranteed by the SBA; the Agency has no funds for direct lending or grants. Although these programs are available for any individual, it gives special advantages to women and those belonging to minority groups. These products are available nationwide.
Construction financing is a short-term loan utilized by borrowers to finance the costs of building an existing building | facility from the ground up. Every loan varies depending on the product type and the amount of time it takes to complete the building process. For most construction loans the borrower is required to provide some level of recourse. Commercial Capital Partners has the ability to provide higher leverage and non-recourse construction financing for a higher cost.
Adjustable | Floating-Rate financing usually utilizes the London Interbank Offered Rate (LIBOR). This product is very attractive to Borrowers who have a lot of upside in an existing property and need a short period of time to stabilize it. These rates have been historically low and have been very popular as they usually have minimal or no prepayment penalties. Commercial Capital Partners assists borrowers so they may utilize these flexible structures for their short term needs.
Many of our clients are buying land to develop that often will have entitlement risk. Commercial Capital Partners tracks land lenders that can underwrite around these risks and provide 12-24 month loans between 50-75% of Land Cost or Appreciated Value. Typically these loans range between 7.5%- 10% in interest rate with recourse. Mon-Recourse may be available.
Ready to receive your no-obligation consultation for free? Just give us a call during regular business hours and we’ll be proud to provide you with a comprehensive financial analysis and recommend a financial package that will be a good fit for your business. Contact us today to get started.