Unrestricted cash-out and no personal guarantees are compelling features of CMBS conduit loans. To make CMBS conduit loans even more attractive, a “fixed cost” option is now available for loans between $2 million and $10 million. Furthermore, loan structure has been eased, creating a more “user-friendly” CMBS conduit loan.
The program provides for a fixed fee of $25,000 for all third-party transaction costs, including appraisal, property condition assessment, Phase I environmental and lenders’ legal costs. In addition, loan documents have been shortened, cash management is typically not required, and reserves for tenant improvements and leasing commissions can be waived.
“The CMBS conduit industry has been grappling with higher transaction costs and more restrictive loan structure since the restart of CMBS conduit lending in 2010,” commented Michael Sneden, Executive Vice President at ValueXpress. “The greatest impact is on small balance ($2 million to $10 million) borrowers that are not used to high transaction costs and complicated loan structure compared with recourse commercial loans from community banks,” said Sneden. “Now we have lower costs and a friendlier CMBS conduit loan to compete better with local banks.”
The program is nationwide and covers all the typical CMBS conduit loan asset classes — office, retail, industrial, multifamily, self_storage, manufactured housing and hospitality. Loan terms are 5, 7, or 10 years, and interest rates are similar to other CMBS conduit loan programs. The maximum loan-to-value is 75%.