ValueXpress recently originated a $6.5-million multifamily loan located in Jacksonville, FL. The transaction closed 32 days from the date the loan Term Sheet was signed. Another recent transaction closed in 48 days. The loans closed quickly due to a combination of factors: the conduit lender’s organized process, ValueXpress’ knowledge of the process to assist the borrower through due diligence, a cooperative borrower and the conduit lender’s legal counsel involvement from day one (but a large part of the increased cost).
We recently noted (“Up-Front Costs Concern Small Balance Conduit Borrowers,” June 30, 2011) that the costs for a CMBS conduit loan in the post-financial meltdown era are significantly higher than pre-crash levels. There are some benefits from the higher costs, namely extremely fast processing and closing time frames.
We also noted that recent spread widening has slowed originations. This has created excess capacity for deal guys at CMBS shops. “The excess capacity and higher up-front fees are providing a tremendous amount of human resources to process each individual deal,“ commented Michael D. Sneden, Executive Vice President of ValueXpress. “In the old days, loan volume was so high and human resources stretched so thin, closing time frames often were missed.”
“I would recommend any time-sensitive transaction, including acquisitions, to utilize CMBS conduit execution,” said Sneden. “The deal will get done on time, avoiding any financial risk for a delayed closing.”