Unlike many commercial loan programs, CMBS conduit loans can provide for partial interest-only loan payments as well as full-term, interest-only loan payments for lower leverage loans. This structure provides higher cash flow after debt service to the sponsor, and it can be particularly useful in situations when rents are expected to increase in the future, which would allow for amortization payments that would be difficult now.
Currently, 10-year, full-term, interest-only CMBS loans are readily available for low-leverage (60% LTV) in primary markets. A good example is long-term (more than 15 years) net lease transactions with credit-rated tenants such as Walgreens (BBB rated), Dollar General (BBB rated) and Costco (A+ rated). Low-leverage multi-tenant properties with diversified rent rolls in primary markets can also be closed with 10-year, full-term, interest-only.
A significant amount of interest-only payment periods is available in secondary markets as well. Each transaction is evaluated on its own merits, but in general, 3-5 years interest-only is available for low-leverage CMBS loans in secondary markets, while 3-5 years interest-only is available at higher leverage points (roughly 65% LTV) in primary markets.
For your next 10-year, interest-only CMBS conduit loan, contact a member of the ValueXpress team: Mike Sneden (firstname.lastname@example.org), Dennis Suh (email@example.com) or Gary Unkel (firstname.lastname@example.org) for a free, no-obligation loan quote.