Commercial mortgage-backed securities (CMBS) loans offer a financing solution for almost all types of commercial real estate projects in the United States. CMBS loans offer some advantages that you won’t get with other commercial loans.
Lenders often call CMBS loans 'conduit loans' because they resell them as securities. Once originated, these loans are often packaged together with other loans and resold to investors as fixed-income investments.
As a result, these loans provide commercial property owners with indirect access to the vast capital of bond investors through resale as bonds.
| Eligible Properties | Multifamily housing, offices, warehouses, industrial structures, mixed-use properties, retail, medical/healthcare, self-storage, etc. |
|---|---|
| Loan Amount Range | Minimum $2,000,000 |
| Interest Rate | Fixed rate throughout term and priced over corresponding swap rate. |
| Loan Term | 5, 7, and 10-year fixed |
| Amortization | 25-30 year amortization with up to 10 years of interest-only available in certain cases. |
| Maximum LTV | 75% |
| Minimum DSCR | 1.20-1.25x |
| Minimum Debt Yield | 7-8% |
| Recourse | Non-recourse except industry-standard bad boy act carve-outs. |
| Prepayment | Typical 2 to 3 year lockout, defeasance or yield maintenance thereafter. |
| Reserves | Taxes, Insurance, Replacement Reserves, Tenant Improvements and Leasing Commissions typically required. |
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