CMBS LENDING

We offer $2-5M Initial Funding, with 5, 7, or 10-year terms. Interest rates range between 4-5% as determined by underwriting parameters, with amounts up to 75% LTV.   CMBS loans are used to buy commercial real estate buildings like multifamily living communities, office buildings, or warehouses. The fixed interest rates are generally based on the swap rate plus a spread, or the lender’s profit. CMBS loans typically come with five-, seven-, or ten-year term lengths, however they are amortized over a 25–30-year duration. Because of the loan term and amortization schedule being out of sync, a balloon payment is required to be paid at the end of the term. Alternatively, the outstanding balance can be refinanced.

Our CMBS loans are guided by two underwriting parameters: 1. The debt service coverage ratio (DSCR) 2. The loan to value ratio (LTV)  We consider both parameters in our loan analysis, in conjunction with a predicted 3. debt yield, or the 4. NOI to loan amount ratio of at least 7%. This allows us to determine the maximum amount of the loan we can extend. Borrowers will also need to demonstrate 5. equity of around 30-40%, and a 6. post-closing liquidity of 5% of the total sum, and 7. total net worth equal to a minimum of 25% of the loan. Additional factors that play a role in our underwriting process include expense ratios and vacancies on the market. CMBS Loans come with two types of Prepayment Penalties – yield maintenance and defeasance. For more information or discuss how can help achieve your goals! Schedule a Strategy Session

 

About the author

Millennium Capital is a multi strategy Private Equity, and Capital Advisory firm dedicated to helping businesses succeed with a full range of strategic finance services making both direct investments in operating companies as well as partnering with other private equity, venture capital firms, banks, and our strategic network of investors to provide long-term and short term financial solutions.
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