We recently received an email from a CMBS conduit loan borrower who wanted us to forward important information to our clients to protect them. The client is seeking a CMBS conduit loan in an oil-related market for a limited service hotel and received a quote for a higher-than-market LTV (most borrowers know CMBS conduit loans for hospitality is capped at 70% LTV) and a very attractive spread. The quote was on the broker’s letterhead and requested $10,000. The borrower, excited about the terms, sent in the deposit to the broker. The borrower was then shocked when the Term Sheet provided by the CMBS conduit lender was received at 70% LTV in addition to a “re-trade on our original terms” (borrower’s quote). After flimsy excuses on the re-trade and uncertainty on the return of the $10,000 deposit, the sponsor felt he was cornered into proceeding. The loan was turned down in loan committee. The sponsor then turned to ValueXpress to complete his transaction. And we will.
The sponsor sends the following message: “PLEASE DO NOT PROCEED WITH ANY CMBS CONDUIT OFFER UNLESS THE PROPOSAL IS ON THE LENDER’S LETTERHEAD AND YOU HAVE PERFORMED DILIGENCE ON THE LENDER’S CAPABILITIES.”
ValueXpress does not win every deal and we are not always the lowest price, but we never take any money up front and we always deliver our loan proposals on the Lender’s letterhead. Also, we always have deposits paid directly to the investment bank. In addition, if there is ever any concern on the performance, we can get the investment banker on the phone to discuss any concerns that a borrower might have.