Debt & Equity Program Overview
Up to 100% Financing of Large Projects
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The Commercial Loan Program is unique to the industry and provides an important product for developers, builders, or borrowers that have a great project, but lack the necessary equity requirements of the typical conduit lender. The program can fund up to 100% of the project costs. The minimum loan is $10 million with no upper limit. The investor combines a financial guarantee with its funds and forms a joint venture where everyone “wins”.
1. Loan: Non-Recourse, blended debt & equity loan, interest only payments.
2. Interest rate: Fixed rate, 275 basis points over the 10-year Treasury bill
3. Equity Participation:
Investor receives up to a maximum of 25% of NOI (Net Operating Income), proceeds at sale, or refinance equity, after the debt and costs of debt are repaid. The percentage of investor participation is in direct proportion to the amount of any cash or land equity contribution by borrower.
4. Term: 1 to 7 years (project dependent). The loan is paid off via sale or refinance. It may be paid off at any time with a 1% pre-payment fee on the balance.
5. Commitment fee: 5% of total funding, payable at closing (due the lender).
6. Broker Fees: 2 ½ % (1 % to the broker and 1 ½ % to direct correspondent)
7. Credit Enhancement/Guaranteed Exit Strategy: 5% of loan amount payable to the loan guarantor.
8. Interest Reserve: Interest on the loan that is built into the loan amount for payment monthly, until the project can support payments. This is not a requirement it’s an option.
Deposit: One percent for loan amounts up to $15 million. For loan amounts up to $40 million, half a percent at application and half a percent at commitment. Above $40 million, the fees are capped at $200,000 for application fee and $200,000 for commitment fee.
The borrower covers the cost of third party reports required on the project (MAI appraisal and market study, phase 1 environmental report, site visit, legal fees), but may be reimbursed in the loan proceeds.
Items 5, 6, 7 and 8 may be added to the loan amount. The borrower has the option to pay these fees and not add to the loan amount, if so desired.
We are very easy to do business with and will explain the details of this program. If you like what you hear we will request some pertinent information and within several days of receipt either thank you, or issue a proposal for client review. If accepted a two-page checklist of due diligence items will be sent and we are underway.
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