Lending Somewhere In Between Traditional Lending & Hard Money
In the world of real estate financing, “securitized” lenders have become increasingly competitive for all types of deals. Whether the deal is commercial, multi-family, mixed use or even storage facilities, many lenders are willing to make loans for commercial developers and owners. That said, however, there are still some types of properties that many lenders won’t touch. A building that has had a major fire, for example, or a property that is half-leased. Whatever the case may be, a new type of lender may act as the savior of the property by providing financing with decent rates for buyers to tackle such projects. Many of the complicating factors affecting these properties make them unappealing to traditional lenders. A different type of lender, however, may be able to craft a refinancing package using an outside-the-box type of approach. As the lending arena becomes increasingly complicated, developers and owners need more choices for loans and attractive rates to make projects work. This could lead to more commercial lending companies entering the market ahead.
CommLending: Expanding Commercial Lending Opportunities
CommLending is one such lending company. To understand how a non-recourse loan provider may fill a need, it is important to understand the other type of players in the game. A middle money loan provider, as its name suggests, sits between traditional lenders, bridge and mezzanine lenders and hard-money lenders. CommLending makes loans typically for multifamily, industrial and office projects. The company also, however, participates in providing capital for experienced operators who have properties with positive cash flow but whose properties may have some flaws. Those flows may keep traditional non-recourse lenders away while making the property suitable for CommLending to lend against.
The recent outbreak of Coronavirus has led many lenders and businesses to essentially halt their operations. While other lenders may be taking a break, CommLending is busy getting loans back on track and closing deals. CommLending has many of its own deals to work on, and is also obtaining deals that have stalled out at other lenders. These deals may continue to find their way to CommLending, especially if the current economic closure and stay at home orders are extended.
Commercial Lending That Lands in Between Traditional and Hard Money, Bridge & Other Alternative Financing
CommLending has the ability to offer competitive interest rates to customers, compared to hard-money lenders, through its single-asset securitization approach. In order to fund the loans it makes, CommLending sells securities on the capital markets. Each security sold is linked to a property or group of properties. This allows the company to make loans that are more customizable and affordable compared to a typical bridge loan.
The loans made by CommLending rely on cash flow. Because of this, the company does not make traditional construction loans. The company does regularly lend, however, on projects that include significant value add components or for those that need money at the beginning to deal with extenuating circumstances.
An example of the type of lending that CommLending gets involved in involves a triple-net property in Ohio that was in default and in foreclosure. The tenant was still in the property, providing it with some cash flow. The property was encumbered, however, by a tenant-in-common ownership structure.
Making the Deal Come to Life
To make the deal work, CommLending cross-collateralized the deal using a set of properties from not only Ohio but Georgia and Oklahoma as well. This put into place a reserve that eventually allowed the major tenant to buy out all of the tenant-in-common partners and consolidate ownership of the property. The refinance of the property also put an end to the foreclosure proceedings.
When CommLending first got involved in the deal, the property was a mess. Most, if not all, traditional lenders would have quickly walked away from such a deal, but CommLending saw a way to make it happen and did. The property has gone all the way from foreclosure proceedings to nearly having permanent financing in place. It’s not the only one, either. CommLending currently has some $80 million in projects that are moving from temporary to permanent financing.
Due to the uniqueness of CommLending’s methods, many borrowers would not even consider such possibilities when looking for a lender. If a borrower’s deal does not check all of the boxes for a traditional lender, they may make the false assumption that a hard-money lender is the only way to go. A lender like CommLending can come in, look at the purchase or refinance, and see the bigger picture. CommLending may provide all of your purchase and cash-out funding needs while making the process simple and convenient.
Having a reliable option outside of a hard-money lender may make all of the difference for experienced developers and owners. A lot of projects out there today, whether multi-family, storage facilities or mixed use, may be good projects but might have some dings against them. Those dings may keep traditional lenders away from those loans, and a company like CommLending can make all the difference for a viable project that may not fit the mold for traditional lenders. Whether you are considering a multi-family or mixed use property, CommLending may provide the necessary securitized funding that may not only allow you to move forward but may also provide you with various cash-out options. If you are looking at a new purchase or are in need of a refinance, consider CommLending for your funding needs.