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TERM SHEET
May, 2004
LOAN SIZE, TYPES and
GEOGRAPHICAL CRITERIA:
- $1 million to $20 million
- Permanent or Bridge financing
- All Types of income-producing real estate located in United
States
- Land Development, farm and raw ground loans
RATE & TERM:
The bank originates loans with both Fixed
and Variable Rates. However, as with most
banks, they prefer funding loans with Variable Rates. The Variable Rate Loans
are priced at a Spread over the One-Year Libor Rate. The appropriate Spread is
determined by the Property Type. These Spreads, along with the the Debt Service
Coverage for each Property Type and the current One-Year Libor rate, can be viewed at Pricing and Debt
Service Guidelines. Additionally,
the lending criteria differs depending on whether a loan is recourse or non-recourse.
Generally, the Terms for each kind of
Loan are:
Fixed Rate
Loans:
- 2 to 10 year fixed term
- Rate to be determined per transaction
- After fixed period, rate will adjust annually at the 1-year
Libor Rate plus the Spread for the particular Property Type
- 20 year, self amortizing loan
- Prepayment Penalties = 3% during first 2 years, 2%
during next 2 years, then 1% thereafter
Current Fixed Rates:
10
years - not presently quoted
5 years - 8.25%
3 years - 7.50%
Variable Rate Loans:
One-year Libor rate plus the Spread adjusted annually
Floor of 6.75% and a ceiling of 12.75% available with a 5
basis point premium over stated rates
Prepayment Penalties = 2% for 5 years, 1% for 6-10 years,
none after 10 years
DEBT SERVICE COVERAGE: See Pricing and Debt
Service Guidelines.
ORIGINATION POINTS:
- Usually, one (1) discount point is charged by the lender in the form
of a "discount" on the note. (For example, in a transaction where the lender
commits to a $5,000,000 loan, the face value of the
promissory note will be $5,000,000 but the funds advanced
would be $4,950,000).
NOTE PURCHASES:
- Our client is interested in purchasing single or multiple (pools)
income-producing loans. Pool size range from $5 - $500 million.
Will consider both performing and sub-performing loans.
ESTIMATED CLOSING COSTS:
- For single asset transactions under $5 million,
the major closing costs are estimated to be approximately: a) $5,000
for appraisals reports; b) $4,000 for phase one environmental
reports; and; c) legal expenses are estimated to be in a range of $5,000
to $10,000. For larger transactions ($5
million or greater) these costs may vary depending on the size and complexity of
the transaction. Of course, third party expenses are passed through to the borrower.
FURTHER INFORMATION:
- Letter of Interest (an offer with loan terms) from the lender within
10 days of submission of loan proposal.
- Loan Closings are usually 45 to 60 days from commitment date.
- Third-Party second mortgages are usually permissible.
- Earn-out features (or 2nd Funder) are available on case-by-case basis
for "Value-Adding" acquisitions.
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