Lenders & Rates

Bank

Whether money center, regional, or community, Banks continue to be a major player in the commercial real estate lending market. Whereas other lenders may be more transactional, Banks tend to be more relationship focused, which allows them to occasionally get comfortable with deals in transition that might need a bit of structure, especially if there is an existing or potential larger relationship for more business. That said, a more typical bank deal would be fully stabilized and cash flowing.

Freddie Mac/Fannie Mae Multifamily

Freddie Mac and Fannie Mae are government-backed enterprises that cater to multifamily loans across the country. They have many programs designed for different scenarios, but they are known to give high leverage, interest only, and non-recourse financing.

Credit Union

Credit Unions play a smaller role in commercial real estate lending when compared to Bank or Agency lenders, but they continue to remain very active, especially in more localized markets. Generally, credit unions have no prepayment penalty, which gives them a unique and competitive advantage against their competitors.

Debt Fund

Private lending has increased significantly in the last handful of years, and with this new influx of lenders, spreads have come down tremendously: in 2010/2011, a debt fund/private lender may have quoted 12% and a 2% origination fee. That same lender now may be quoting at 6% and 1%. These lenders get to charge a bit more than traditional lenders, as they fill a void that the more conservative lenders won’t touch, either due to “hair,” timing, creditworthiness of the Borrower, etc.

CMBS

CMBS (“Commercial Mortgage Backed Securities”) loans are best suited for stabilized multifamily, industrial, grocery-anchored retail, hospitality, or office assets – often but not always in mid-range MSAs across the country. Your local grocery store, for instance, might have a CMBS loan on it. CMBS can be an arduous process, but the juice might be worth the squeeze: they tend to give high leverage, non-recourse, and interest only money (bad words for many banks or credit unions, especially for retail or hospitality).

Life Insurance

Life Co. loans are known to be very cheap and long term. However, they generally take a bit longer to close and give the Borrower less loan proceeds than their competitors. Life companies seek out low-leverage and stable assets and in turn can give very low-rate loans with a long loan term.

SBA

SBA (Small Business Administration) has improved its process significantly over the last several years. These loans, which cater to owners of delis, liquor stores, coffee shops, restaurants, etc, used to take 9-12 months to close and be overwhelmingly difficult to navigate. Now, it’s possible to close SBA loans in as fast as 30 days. These loans typically feature a high LTV (loan to value) and flexible structure.