Higher leverage CMBS conduit loans are now available for small balance (greater than $5 million) transactions utilizing a first mortgage and mezzanine loan combination that is seamless to the borrower. Leverage can be up to 75% for hospitality properties and 80% for commercial/multifamily properties.
“Historically first mortgage and mezzanine loan combinations in CMBS were only available on loans of $20 million and up, and the conduit lender needed to team with a mezzanine lender, creating an inefficient and costly execution,” said Michael D. Sneden, Executive Vice President at ValueXpress. “This program allows for smaller balance transactions as low as $5 million, and the mezzanine portion of the loan is handled in-house. The borrower receives one blended interest rate and makes one payment. The underwriting process is efficient and less costly.”
The loan product is available for all asset classes that qualify for standalone CMBS conduit first mortgage loans — commercial, multifamily/MHC, self-storage and hospitality. There are caveats, however; no cash-out (and preferably some cash in), no credit issues with the sponsor, newer assets and strong markets are required.
“This product is exceptional for situations in which the existing loan balance on a maturing loan cannot be cleared through a 70%-75% standalone CMBS conduit first mortgage loan,” said Gary Unkel, Senior Originator at ValueXpress. “A client was 15% short on loan proceeds to clear a refinance of existing debt and was unwilling to fund all the shortfall. In the end, the borrower agreed to fund about 5% of the shortfall including closing costs, and the 10% additional leverage provided by the first mortgage and mezzanine loan combination covered the balance. Furthermore, the blended single rate was not that much higher than a standalone CMBS conduit first mortgage loan rate.”
To obtain a quote for a CMBS conduit loan scenario requiring additional leverage, contact your ValueXpress representative.
