Small Balance Bridge Product

Property  Types:Office, Medical Office, Retail, Industrial, Multifamily, Hotel (with an approved franchise agreement), MHC, Self-Storage and Land (subject to a non-agricultural lease) other asset classes on a case by case basis.
O/O Properties:   Allowed subject to minimum credit requirements for the tenant and guarantor. Tenant shall have an EBITDAR/Rent ratio in excess of 2.0x
Loan Purpose:Acquisition — Subject to minimum equity investment of 20%
Refinance – Cash outs considered with title seasoning requirements
Loan Size:$1.0MM to $6.0MM
Locations:Generally urban or suburban locations in primary, secondary or tertiary markets, no specifically excluded states or markets.
Term:1 to 3 year primary term (with extension options, which may be subject to debt yield, occupancy, DSCR and/or LTV hurdles and payment of a fee, the fully extended    term shall not exceed 5 years).
Rate:Market based spread over LIBOR (or equivalent benchmark)
Rate Type:Floating
Amortization:Generally interest-only, but may be subject to amortization (20 to 30 years) during extension periods.
Interest Rate Cap:Required from a counter party with at least an A rating from Standard and Poors, for loans below $5.0MM, this requirement may be waived.

Fees:                  Generally 1.0% – 3.0% upfront with extension fees (0.5% – 1.50%) and exit fees (0.50% – 2.00%). Exit fees may be waived on a case by case basis. Deposit for 3rd Parties usually range from $15,000 up to $30,000+ depending on loan size
DSCR: May be minimal at closing but >= 1.2x on an underwritten stabilized basis (exceptions for condominium loans)
LTV/C:  Up to 80% on an as-is basis and 75% on a stabilized basis. LTC is based on lender approved costs of acquiring the asset.
Subordinate Debt:  Permitted subject to a maximum 80% stabilized value.
Reserves:  Determined on a loan by loan basis. Generally, includes funding of tax, insurance, TI/LC, replacement reserves. If the property’s LTV is less than 50% and the DSCR is above 2.00x, reserves may be waived on a case by case basis. Interest and operating expense reserves may be required if the property’s in-place DSCR is < 1.05x
Prepayment: Call protection (minimum interest) for loans will generally be required for the first 12 – 18 months
Recourse: Determined on a loan-by-loan basis. Generally, loans less than $3.0MM will have some level of recourse, loans above $3.0MM will generally be non-recourse except for standard carve-outs. Additional recourse may be required i.e. to cover shortfalls is operating expenses and/or interest expense (based on low in-place or underwritten net cash flow – less than 1.05x DSCR) and construction completion guarantees,
Borrower: Single Purposes Entities. No more than 5 unaffiliated TIC Borrowers per loan.
Guarantor: Subject to minimum liquidity requirements of 10% of the loan balance and net worth equal to the loan amount (after taking into consideration any guarantees on other loans). To the extent that there is recourse above and beyond typical non- recourse carve-outs, the minimum liquidity requirements shall be equal to the greater of 125% of the recourse amount on the underlying mortgage or 10% of the loan amount.

Documentation Requirements – Initial Review

  • Investor
    • Sponsor’s Resume/Executive Summary
    • Sponsor’s Business Plan
    • Current Rent Roll
    • Last 2 yrs. Property Operating Statements/P&Ls
    • Pro Forma/Discounted Cash Flow
  • Owner Occupied
    • Sponsor’s Resume/Executive Summary
    • Sponsor’s Business Plan
    • Last 2 yrs. Business Tax Returns
    • Last 2 yrs. Personal Tax Returns