CRE

Commercial Real Estate Finance

Commercial Real Estate (CRE) Finance

The various Categories of Commercial Real Estate include:
  • Apartments: garden and high-rise, student housing, senior living including independent and assisted living.
  • Industrial: single tenant, multi-tenant, business park, manufacturing, distribution,
    warehouse, rail-served, high clear-span, ground level doors and doc-high doors.
  • Retail: strip, neighborhood, big box, out-pad, ground lease, regional, two-story.
  • Office: single tenant, multi-tenant, interior loaded or exterior loaded, high rise or low rise, build-to-suite, mixed use with office in front and industrial in rear, mixed use with retail on ground floor and office in upper floors.
  • Self-storage: single story drive-up, multiple story with full security.
  • Mobile Home Park.
  • Hospitality including full-service, limited service, extended stay, and resorts or leisure-focused property.

The various types of Lenders that make loans on Commercial Real Estate include:
1. Commercial banks or credit unions;
2. Insurance companies;
3. CMBS Wall Street firms;
4. Real Estate Investment Trusts (REIT’s);
5. Family offices – private money;
6. Hard money short term;
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The various types of Lenders that make loans on Commercial Real Estate include:

 

1. Permanent loans that are long term for stabilized properties, whose interest rates that can be either fixed or floating, and most have some form of principal amortization.
2. Interim construction loans that are for the financing of construction of a new commercial property, typically short term, normally interest only on the disbursed amount only, and disbursed based on progress draw requests typically on a monthly basis.
3. Bridge loans that are short-term to ‘bridge’ between two transactions such as construction to a long-term permanent loan with a stabilized property.
4. Combined construction to permanent loan.
5. Hybrid loan.
6. Mezzanine Loans that are supplemental financing when the borrower needs more capital than a senior lender will provide, and normally has a higher interest rate, sits between the senior loan and equity in the capital stack, normally secured by a pledge of some ownership interest, and is not a lien on the real property.
7. CMBS Loans (Commercial Mortgage-Backed Securities (securitized)) that are also called conduit loans, that are structured into a pool of mortgages in a fund, then sold into the secondary market into fractured tranches based on risk (different interest rates), typically on 5 to 10-year terms, interest only or with amortization, non-recourse but with ‘bad boy clauses’ that trigger recourse to the Key Principal, and typically are at least $5,000,000 but can range above $100,000,000.
8. Hard Money Loans from typically private investors, offering quick response and rapid funding, higher interest rates, normally without a formal appraisal, could be distressed real estate, and whose borrowers might not qualify for traditional loans.
9. Preferred Equity Financing, that is technically not a loan but is often structured similarly to mezzanine debt, that provides capital in return for a preferred return, and more typically is used to fill financing gaps without the borrower taking on more traditional debt.
10. SBA 504 and 7 (a) loans, offered by the SBA thru commercial banks, used for fixed assets such as real estate or equipment, and normally is used by small business owners buying owner-occupied properties or with at least more than 51% ownership.

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