ValueXpress is making a market in small-balance CMBS loans as an accommodation to new and existing customers, while most CMBS conduit lenders have minimums of $3 million and even $5 million in some instances.
“With a push to close more self-storage and small-balance single-tenant loans such as drug stores and dollar stores, we recognize the need to be able to accommodate lower loan balances,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “These property types, particularly self-storage, tend to have lower property values, resulting in loans below $3 million. We don’t want these clients to be shut out of the CMBS conduit loan market.”
“We recently received a low-leverage CMBS conduit loan request for $2 million secured by a 400-unit Class B self-storage property located in Maryland,” commented Dennis Suh, Vice President at ValueXpress. “The sponsor recently renovated the property, resulting in an increase of $100,000 per year in net cash flow and a 90% occupancy rate, but he could not find a CMBS lender interested in a $2-million loan.”
ValueXpress was able to offer two options to the client. Both offers were for full-term interest-only payments. The first option provided for fixed third-party fees through the small-balance fixed fee program. This program fixes the costs of third-party fees and lender counsel fees to $20,000-$25,000. The second option provided for a slightly better interest rate, but without fixed third-party fees. The sponsor leaned toward the fixed-fee option as both options resulted in a sub-5% interest rate, which was the sponsor’s target.