Sources: The Real Estate Capital Institute®, CNNMoney.com, US Federal Reserve. Disclaimer: The information contained herein is compiled from various sources deemed reliable, but is not guaranteed to be accurate and may contain typographical errors and/or be incomplete. Statements, opinions and estimates presented herein are subject to change without notice and are independent of sources mentioned. Quotation not permitted without written permission. Past performance does not indicate future results.
Notes: (1) Subjective rating of traditional income properties (apartments, industrial, office, retail.) Credit properties must be investment-grade and self-amortizing.
Quick reference tables are helpful tools for overall sizing of funding opportunities. Underwriting - General Guidelines and Mortgage Closing Checklist tables are included:
Underwriting Guidelines
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UNDERWRITING - GENERAL GUIDELINES |
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ITEM/PROPERTY GRADE(1) |
CREDIT |
CLASS A |
CLASS B |
CLASS C |
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Loan-to-Value |
Up to 100%+ |
Up to 75% |
Up to 65% |
Seldom 60%+ |
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Debt Coverage Ratio |
1.00x + |
1.20x - 1.25x |
1.25x - 1.30x |
1.30x - 2.00x |
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Fees |
Par to 1% |
Par to 1% |
1% |
1% - 2% |
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Secondary Debt |
Yes |
Debt Coverage Restricted |
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Very Restricted |
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Recourse |
No |
No |
Seldom |
Seldom |
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Forward Delivery |
3-5 bps/month |
N/A |
N/A |
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High Debt Coverage |
N/A-best rates |
Each 10% DCR increase lowers rate by 10 bps |
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Smaller Loan |
10-25 bps premium for loans below $5 million. |
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Collection of Reserves |
N/A-best rates |
Negotiable for multi-tenant property w/ DCR > 1.40x |
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Prepayment |
Locked first half of term, yield maintenance/defeasance thereafter. 1% minimum. |
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Rate Buydown |
1% fee reduced by approximately 12.5 bps (10-Year Term) or 25 bps (5-Year Term). |
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Leasehold |
10 bps or more, depending upon lease hang-out in excess of loan term. |
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Non-Credit Tenant |
25 bps or more, depending upon financial status. |
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