Commercial Real Estate Lender – Pacific Security Capital – Guides Retailers Through the Retail Property Loan Underwriting Process
Pacific Security Capital, a commercial real estate investment bank offering the broadest possible array of financing alternatives, breaks down the underwriting guidelines for obtaining commercial real estate financing for retailers.
(PRWEB) February 20, 2004
Http://www. PacificSecurityCapital. com (http://www. PacificSecurityCapital. com) - Pacific Security Capital, a leading commercial real estate lender offering the broadest possible array of financing alternatives, has developed a new guide for breaking down the underwriting guidelines retailers should consider when obtaining Commercial Real Estate and Retail Property Loans.
Pacific Security Capital has extensive knowledge of the commercial real estate business; including permanent loans, mezzanine loans, bridge and interim financing for multifamily, retail, office, hospitality and industrial loans. Through their years of experience Pacific Security Capital has compiled the following underwriting guidelines Retailers should consider when looking to secure a Retail Property Loan:
1 – Determine if the property is eligible:
Anchored or unanchored single-story retail centers are eligible for Retail Property Loans:
Anchored – Allowable anchors include supermarket-drug stores, discount department stores, dry goods, retail and home improvement stores. Financially healthy national, regional or local chains are acceptable. Anchor tenant leases should have at least five years remaining on their leases, as of the date of closing. Anchors should exhibit strong sales histories. Unanchored – Unanchored centers should have a complimentary tenant mix. Stores in unanchored centers must have strong, stable sales histories. Not more than 25% of the leases should expire in any single year. Credit tenants with base lease terms exceeding five years beyond the final term loan typically will receive most favorable underwriting.
The property must be strong sales generator with a good reputation in the market. Two-story centers can be considered, but typically will underwrite the second story with income limitations. Special use properties and smaller buildings with limited appeal to alternative tenants are excluded. Free-standing stores are considered on a case-by-case basis. Current minimum economic occupancy of 85% is required. And credit tenants with greater than five years remaining on the lease term are preferred.
2 – Determine eligible property locations:
Nationwide - require direct access to major roadways and high visibility. Infill locations in developed neighborhoods are preferred. Unanchored centers should be located in high traffic areas. Where direct competition exists, the property is required to exhibit a stronger market appeal than the competition or a history of retaining its tenancy, sales volume and competitiveness.
3 – Identify the Type of loan desired:
Acquisition, Development, Construction, or Permanent Commercial Real Estate Financing is available.
4 – Identify Details of the Loan:
Loan size – a typical retail property loan ranges from $3 Million - $100 Million, larger portfolio transactions will also be considered Debt Service Coverage – Generally, 1.20 to 1.30x, depending on the quality of the location of the market, the property and the existence and quality of anchor tenants. Loan-to-Value Ratio – Up to 80% maximum LTV in first position for permanent financing. Higher leveraged requirements should inquire about mezz debt options. Long Term – 7, 10, 15, 20 and 25 years are available for permanent financing. AD&C loans from 12 – 36 months. Amortization – 30 years or less, depending on major lease terms and expiration, and property age. *Interest Rates – Pricing is based upon the quality of the real estate and the credit strength of the deal.
By following these underwriting guidelines from Pacific Security Capital, the process of obtaining a Commercial Real Estate Retail Property Loan is greatly accelerated.
About Pacific Security Capital:
Pacific Security Capital is a leading commercial real estate lender providing debt, equity and hybrid capital for the acquisition, development, construction, renovation, bridge, mezzanine, and permanent financing of commercial real estate projects requiring more than $1MM in financing. Pacific Security Capital is headquartered in Portland, Oregon with other offices in Seattle, LA, Chicago, Houston and New York. More information about the company can be found at http://www. PacificSecurityCapital. com (http://www. PacificSecurityCapital. com).
For information about Pacific Security Capital visit: http://www. PacificSecurityCapital. com (http://www. PacificSecurityCapital. com) or contact Mike Myatt at mikem@PacificSecurityCapital. com
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