ValueXpress has many borrower clients who obtain CMBS conduit loans for the sole purpose of selling the property under the assumption clause. How many times have we heard “the acquisition deal fell apart because the buyer could not secure financing?” Selling the property under the loan assumption provision can eliminate the financing risk related to the sale. Very simply, the seller just needs proof the buyer has the equity to close. In addition, low-rate, non-recourse assumable financing can help achieve a higher purchase price for the buyer.
However, all assumptions are not automatically approved. The buyer needs to complete the assumption approval process, which can be lengthy and burdensome if the buyer and seller are not familiar with the process and do not know what they are doing.
Fortunately, ValueXpress has successfully navigated the assumption process for many of its clients and will continue to do so. We know how to qualify purchasers up front to determine that they will qualify as a replacement non-recourse guarantor for the selling guarantor. We are knowledgeable regarding the rules for foreign buyers, group buyers and buyers attempting to utilize a non-credit entity to be the guarantor for non-recourse carve-outs (not going to happen).
The process of getting CMBS conduit loan assumptions approved is more difficult since the restart of the CMBS market in 2010 compared with pre-2007. New standards in underwriting, additional layers of approvals, and a laundry list of conditions make it critical that you work with an experienced advisor. This is just another reason to utilize ValueXpress for your next CMBS conduit loan.