2.3.15: Fixed-Fee CMBS Loan Programs Continue to Expand

“A colleague of mine for over 15 years announced the formal launch of a new fixed-fee CMBS conduit loan origination platform at the 2015 MBA Commercial Real Estate Finance Convention (CREF) held in San Diego, California,” commented Michael D. Sneden, Executive Vice President of ValueXpress. “I was particularly excited as this industry pro ran the small-balance, fixed-fee program at one of the leading CMBS conduit lenders for over 10 years, and we were able to complete a significant amount of transactions in this program prior to the financial crisis,” said Sneden.

One of the negatives of CMBS conduit loans is high transaction costs, which have increased significantly since the restart of CMBS conduit loan lending in 2010. Prior to the financial crisis, a borrower typically incurred transaction costs for third-party reports and searches of about $25,000 on a typical $5-million CMBS conduit loan or even less, say $12,500-$15,000, in a fixed-fee program. But since 2010, transaction costs have risen to $40,000-$50,000 for that same loan, as generally all the service providers are charging more. Compounding the issue is that few fixed-fee CMBS programs resurfaced after CMBS lending resumed in 2010.

However, with competition fierce and conduit lenders needing to find a niche or some level of differentiation, fixed-fee CMBS programs are now starting to aggressively emerge. The new fixed-fee program caps all transaction expenses at $25,000, essentially 50% less than current uncapped levels. The program is for all traditional CMBS conduit loan assets except hotels (apartments, manufactured housing communities, office, retail, industrial and self-storage). The program is eligible for loan amounts from $1 million-$10 million.

“This program will be well suited for borrowers concerned with the high costs of obtaining a CMBS conduit loan, and we expect to originate significant volume for this program,” commented Gary Unkel, Senior Loan Originator at ValueXpress.

This entry was posted in CMBS Conduit Loans, Commercial Lending, Commercial Real Estate Loans, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged , , , , . Bookmark the permalink.

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