Thanks to Steve Johannes at Towle Financial Services (612.335.7730) for the following update on commercial financing. Steve and Towle are a great contact for commercial mortgage loans.
75% LTV – Conduit loans
There is no longer any doubt whether the Conduit Lenders will once again be a viable source of debt for commercial real estate. They are back, and not only are they back for the larger $20M+ loans, they are becoming more and more available for loans under $10M. And there are even programs for small loans on stabilized properties $1M-$5M. The niche for these conduit programs seem to be maximizing debt leverage as the underwriting seems to be able to generate higher proceeds than the Life Insurance programs, or even Fannie Mae/Freddie Mac when there is “cash out”. The main drawbacks for these programs are slightly higher pricing and more costs involved in loan closing due predominately to legal fees associated with this type of debt. Typical terms are 10-year fixed rate term and 30-year amortization. These programs seem to be changing week by week due to the competition from other conduit lenders and Life Insurance companies.
Current Rates:
Rates listed below are estimates for 10-year fixed rate loans greater than $3 million. Specific rates will adjust according to LTV, DSCR, 10-year Treasury Yield (3.50% on 4/12/11), and other property specific data. Please call to discuss specific properties and rates.
Multifamily: 5.20-6.25%
Industrial: 5.25-6.00%
Office: 5.25-6.00%
Hotel: 6.5%-7.00%
Anchored Retail: 5.25-6.00%
Un-Anchored Retail: 5.50%-6.50%
Multifamily Small Loan ($1 million – $5 million)
Multifamily rates below are based on a 10-year term, 30 year amortization and up to 80% maximum Loan To Value.
Loan Size Rate Range
$1,000,000-$3,000,000 5.75%-6.25%
$3,000,000-$5,000,000 5.50%-6.00%
$5,000,000 + 5.20%-5.75%
10-year Treasury
The 10-year Treasury Yield is the benchmark most frequently used by Life Insurance Lenders to determine their interest rates for Commercial Real Estate debt. Below is a graph which charts the 2011 movement of this 10-year Treasury Yield:
Source: US Department of the Treasury
|
Average 10-Year Treasury |
|
|
Average – 2010 |
3.22% |
|
Average – Last 10 years |
4.15% |
|
High – Last 12 months |
3.85 (April, 2010) |
|
Low – Last 12 months |
2.54% (October, 2010) |
|
Source: US Department of the Treasury |
|
Source: US Department of the Treasury
Towle Financial provides debt and equity capital to finance the construction, sale, or leveraging of commercial real estate and multi-family properties. The Towle name has been a mainstay in Midwest Commercial real estate and specifically commercial mortgage loans in Minneapolis/St. Paul for over 100 years. Towle Financial was formerly part of Wells Fargo until March, 2010 when Towle was purchased back from Wells Fargo by the current and former owners: Mark Vannelli, Dan Mott, and Mike Pazlar.
Towle primarily works with Institutional Clients: Life Insurance Companies/Pension Funds; Wall Street: Conduits/REITS; GSE various multi-housing programs including Freddie Mac, Fannie Mae and FHA providing long-term non-recourse permanent debt. Typical loan terms are from 10-20 years locked rate and amortizations ranging from 10-30 years. Towle currently represents over 10 Life Insurance Companies on an exclusive/semi-exclusive basis. We also have over 50 other lending relationships we work with in placing debt for our clients. Towle currently has offices in Minneapolis and Detroit, with a servicing portfolio of approximately $1.6 billion, administrated out of our Minneapolis office.
