Eligible Property Types:
Modern office buildings containing a minimum of 10,000 square feet of net rentable area and adequate available parking in suitably zoned commercial locations. Strong preference for properties located within planned industrial parks or CBD’S in cities where the office market and office oriented employment characteristics are strong and occupancies are high. Preference for suburban locations with good access and visibility.
Properties should be substantially leased for terms consistent with the local market, but generally not less than five years. Multi-tenant buildings leased to third-party users are preferred but single tenant buildings will be considered subject to occupancy by strong credit tenant on long term lease. Reserves will be required for estimated loss of revenue and refit/ leasing costs at lease expiration.
Facilities should have been completed and in operation for at least 12 months. Properties built or substantially renovated since 1975 are preferred.
The loan-to-value ratio may not exceed 80%. The minimum debt service coverage ratio is 120%. Lower coverage ratios may be accepted for facilities leased to credit-worthy tenants on a long-term basis.
Occupancy should be a minimum of 85%. The facility should be located in a market area in which demand is expected to increase.
Generally, a single purpose entity is required
5, 7 or 10 year terms are available at the borrower’s option. Amortization will generally be in the 15-25 year range, but some loans on new buildings could be amortized over 30 years.
The interest rate is set at a fixed spread over comparable term treasuries, and varies based on coverage ratios. Floating rates are also available. Please call for current rate and spread quotes.
The borrower is responsible for all closing costs and required reports (appraisals, engineering and environmental reports, surveys, etc.).
The loans are generally expected to be non-recourse except for normal lender carve-outs.
Yes, with consent and a 1% assumption fee.
Reserves: Tax and insurance reserves are required. Also, a replacement reserve account is to be established and funded to provide for capital replacements and re-leasing costs and rental interruption.
Prepayment will be prohibited for some period, depending on the term, and then be subject to defeasance or yield maintenance until the final six months, during which prepayment is allowed without penalty.
Use of Proceeds:
Loans are available for both purchase and refinance transactions.