CMBS Apartment Loans

Another major source of mortgage capital for apartment building loans is the commercial mortgage-backed securities market through Wall Street investment banks. CMBS lenders make individual loans to borrowers which are then packaged and sold to investors as securities. These loans provide interest rate yield to their investors while contributing liquidity to the capital markets. This liquidity in the markets means lower commercial mortgage rates to borrowers. Borrowers are well served when there are multiple sources of capital in the market. Some of the benefits of a CMBS loan include:

LOAN AMOUNT

$2 million to $10 million+

MARKETS

Primary, Secondary, and Select Tertiary Markets

ELIGIBLE PROPERTIES

Multifamily, Manufactured Housing, Office, Retail, Industrial and Self-Storage

SECURITY

First Lien Mortgage

TERM (YEARS)

10 years

AMORTIZATION (YEARS)

25 – 30 years

MAXIMUM LOAN TO VALUE

75%

MINIMUM DSCR

1.25x

RATE

Fixed rate based on spread premium over 10-year US swap rates

NON-RECOURSE

Non-Recourse, except for standard industry carve outs

PREPAYMENT

Permitted after a typical lock out period, subject to defeasance

ASSUMABLE

Permitted, subject to Lender’s Approval and 1% assumption fee

CAPPED COSTS

3rd party costs & legal are capped

RESERVES

Real Estate Taxes, Insurance, Replacement Reserves, TI/LC (if applicable), and others as reasonably determined by underwriting