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Loan Type: |
Mezzanine |
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Amount:
$1 to $10 million
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Loan-to-Value:
Mezzanine loans will typically be capped at 50% to 60% of
total cash funds invested in the property by Borrower. Underlying First
Mortgage Loan-to-Value ceilings are 75% for office, retail, and
industrial properties, 80% for apartments, and 65% for hospitality and
healthcare properties.
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Debt Coverage:
Target DSC levels for Mezzanine Loans will
be established at 1.10x (1.20x for hospitality and healthcare), although
some loans may be underwritten to lower DSC levels based on superior
property characteristics, credit quality of tenants, and for other
extenuating factors. DSC on the underlying First Mortgages have minimum
floors of 1.25x for office, retail, and industrial properties, 1.20x for
multi-family projects, and 1.40x for hospitality and healthcare
properties.
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Interest Rate:
Varies, minimum of 12%
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Yield
Requirement:
Dependent upon
risk parameters of transaction; minimum IRR of 14%.
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Term:
Equal to or less than the loan term of the
underlying First Mortgage.
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Amortization:
Self-amortizing over the term of the loan in most cases.
Loans may be interest only for loans with terms of three (3) years or
less.
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Application Fee:
$5,000, payable at application
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Loan Fee:
Typically 1.0%, additional front-end and/or back-end fees
may be required to achieve desired yield.
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Placement Fee:
1.0% to 2.0%, payable to Progressive Realty
Group at closing.
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Security:
Pledge of partnership interests in a bankruptcy-remote
single asset SPE; second mortgage lien if available.
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Recourse:
Loans may be non-recourse, partial recourse,
or full recourse depending upon risk profile of transaction.
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Prepayment:
Typically closed for 18 months, open to prepayment
thereafter with make-whole provision to achieve target yield.
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Borrowing Entity:
SPE is preferred
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Ground Leases:
Considered on a case-by-case basis
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Third Party
Reports:
Lender will agree to accept Third Party
Reports prepared for First Mortgage Lender whenever possible.
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Legal:
Lender legal will be performed by lender
appointed counsel.
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Financial
Reporting:
Annual and quarterly financial statements
are required.
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Documentation &
Closing:
Standard documents will be utilized. The
closing process of the Mezzanine Loan is intended to run on parallel
track with the First Mortgage Loan’s.
Progressive Realty Group, LLC