In another sign of real estate investors looking for opportunities for investment, financial services companies are beginning to offer non-recourse construction/rehabilitation loans for typical CMBS-quality assets. CMBS-quality assets are preferred as the expected exit strategy is a fixed-rate CMBS conduit loan funded on stabilization.
“We are not active in originating construction loans per se,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “But we have a solid client roster and many of the cash-out CMBS conduit loans we close are contemplated by the sponsor to provide the equity component for a new construction project. It is nice to be able to offer a one-stop option for the client, the cash-out loan and the construction loan. Plus the construction loan underwriting is CMBS conduit loan based, so we are intimately familiar with the drill and can guide the client through the process.”
Typical non-recourse deal terms are $10 million and up, 75% loan-to-cost, three-year term with options to extend. Rates are reset monthly and are in the Libor plus 6.50% area (6.65% today). Payments are interest only.
Qualifying assets are multi-family/manufactured housing communities, commercial (office, retail and industrial), self-storage and hospitality located in primary and secondary markets. Loans will be considered for construction, rehabilitation, turnaround and conversions. Contact your ValueXpress representative for details.