Loan submissions have increased dramatically in September at ValueXpress. The firm is seeing strong demand for CMBS conduit loans secured by hotels, self-storage, retail, office and industrial properties.
“As often happens at this time of year, the summer slowdown is over, and borrowers are back to work, buying or refinancing properties that need non-recourse financing or cash-out proceeds from refinancing,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “In the hotel space, we are seeing a lot of refinancing of floating rate SBA 7(a) loans tied to the prime rate into fixed-rate CMBS loans to escape the unrelenting rate increases expected near term and in 2019. We are also refinancing hotels that require near-term Property Improvement Plans (PIP) by including the cost of the PIP in the loan amount.”
“In addition, we continue to refinance maturing CMBS conduit loans into new ten-year CMBS conduit loans, often at lower rates and with cash-out proceeds,” said Dennis Suh, Senior Vice President at ValueXpress. “On the acquisition front, we are seeing IRS section 1031 tax-deferred transactions and deals being purchased by multiple sponsors who require a non-recourse loan because the partners will not provide personal guarantees required by community banks.”
We are also seeing strong demand for our fixed-fee CMBS program. 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. Furthermore, loan structure has been eased, creating a more “user-friendly” CMBS conduit loan.