Hi


I am looking for commercial real estate Loan (LTV=70%) for purchasing brand new Vacant income producing office building, how to calculate DSCR in such case? based on market rent? How lender will underwrite and What docs lender needs in such case?

Any suggestion will greatly appreciated.

Thanks

findloanbroker,

My firm direct lends on properties like this. We structure the loan as a 6 month Libor based floater in the 250-300 range. We figure TI/LC's into the loan as well as closing costs. We go as high as 90LTC depending on the market and the sponsors experience. We are guidelined to a $5mm minimum loan amount.

Call me if you are interested, and I'll send you our newest press release.. we were written up in COSTAR for a similiar transaction for $28mm.

When you say 70% LTV... do you mean 70% loan-to-purchase?

For a vacant income producing property, a cautious lender would lend on the "as is" value of the property. Which would be obtained by figuring out the "as stabilized" and then discounting it back for the lease-up period.

If a lender came to me with this prospect I would say something like "lets structure it so that the borrower has enough money to pay us while he is leasing up the property. We could add an interest reserve on it but lets not lend more than 80% of the "as is" value as per a satisfactory appraisal"

This loan could be written up 10 different ways with many different LTVs as many combinations as there are Commercial lenders.

And yes the appraiser will use market rents that are similar to the property for the stabilized value.