A CMBS conduit loan is perfect for the owner or buyer of a multi-tenant income producing property that is one of the following: multifamily, manufactured housing community, retail, industrial, office, hotel or self-storage. This borrower would be seeking to refinance or purchase one of these assets. The borrower would require a non-recourse loan with no personal guarantees. If the transaction is a refinance, the borrower would be seeking cash-out loan proceeds. The refinance borrower would have a pressing need for cash. The client would need a loan of at least $2 million. The client would be a long-term holder of income producing real estate as CMBS conduit loans are not practical for short-term, value-add transactions, which are more suitable for bridge loans.
A good example of a perfect CMBS borrower is the owner of a Holiday Inn Express (HIX) who built the hotel ten years ago with personal equity and a community bank loan. At that time, the franchisor for HIX was offering ten-year franchise agreements to HIX owners. The owner of the HIX has done very well and has reinvested profits into other opportunities. Now the franchise is coming due, and all new HIX franchise agreements require a Property Improvement Plan (PIP) known as “Formula Blue.” Formula Blue costs $15,000/room to complete, or $1,100,000 in this instance. The owner, having invested profits elsewhere, does not have the cash.
Since the property value has doubled in the past ten years, the problem is solved with a cash-out CMBS conduit loan to provide the $1,100,000 in cash to complete the Formula Blue PIP for the new HIX franchise agreement. For your next cash-out CMBS conduit loan, contact Mike Sneden (firstname.lastname@example.org), Dennis Suh (email@example.com) or Gary Unkel (firstname.lastname@example.org) for a free, non-obligation loan quote.