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
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