Investment Strategy

Mortgage Loans

<< Types of Loans

Eligible Properties
Multifamily, retail, industrial, office, hospitality and condominium project/properties. CBD and suburban multi-tenant, single tenant and credit tenant properties are eligible. Stabilized occupancy and income required for long term debt. Bridge loans and short term debt available for un-stabilized properties or repositioning opportunities.
Eligible Property Locations
Nationwide; located on main roadways with good visibility and access, or in an established office park. Prefer locations in strong market areas or with a demonstrated ability to compete and re-lease space at market rates. Require solid market strength as is determined by, among other factors, absorption and trends in population and employment.
Loan Size
$500,000 – $20 million; will also consider larger portfolio transactions.
Debt Service Coverage
1.20 x minimum with exceptions in limited circumstances.
Terms from 12 to 36 months. Extension options available, early termination requirements negotiable.
Loan-to-Value Ratio
Up to 80%
1-10 years
30 years or less depending on major lease terms/expiration, and property age. Interest only options available.
Multi-tenant properties with long leases and/or staggered lease expiration dates or credit-tenant properties will command the most competitive rate structures, however, lower occupancy may represent a significant value added opportunity generating aggressive short term funding rates. Loans for single tenant properties will be dependent on the history and financial strength of the tenant business and will typically be amortized over the life of the lease term. May require higher coverage and reserves.
NOI calculation/Underwriting Assumptions
Based upon trailing three year operating history (waived for new construction). Rent revenue is the lesser of the contractual base rents or current market rents. Expense recovery must reflect the stabilized operating history of the project. Minimum vacancy of 5% or sub-market average. Recoveries of NNN rents must be consistent with market.
Rent Roll
Prefer smooth lease expiration schedules so that the debt coverage ratio in any given year does not fall below break-even. May consider properties with significant rollover risk on a case-by-case basis. Tenants not occupying space and paying full rent for at least 3 months may require a seasoning reserve equal to 3 month’s rent.
Management Fee
Minimum management fee of 5% of effective gross income. Single tenant buildings that are fully maintained and managed by the occupant can be underwritten at a 3% management fee.
Typically $.10 to $.25 per square foot for structural reserves depending on property age and condition and adjusted in accordance with the engineering report. Tenant Improvement and Leasing Commission reserves, if applicable, to be determined from the rollover schedule and market averages.

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