100% financing for Pre leased NNN developments

[Mike Lewis]

We put this custom structure together with a family office for NNN developers.

100% financing for Pre leased NNN developments with credit rated tenants.

• 10% To 12% Base Rate, Floating.

• No lender participation.

• 1-2 Points In - to Lender

• 0- 1 Point Out - to Lender

• You will need at least a 1.5% spread between the yield on cost and the exit cap rate.

• Lenders need to see a clear path to an exit.

• Full Guaranties until rent commencement

• I will charge 1%

• “Bad Boys”

• Limitations on Development Fees until CO

• Typical collateral:

  • First Deed Of Trust

  • Assignment of Rents

  • UCCs, Etc.

The developer will need to demonstrate the financial capacity, including the ability to cover cost over runs, to get this to commitment. To proceed, I need project proformas and 2 years’ PFS of the developer, comps, ProForma. The money is paid out in draws either monthly or as benchmarks are reached. Notice we've kept origination to a minimum. If you're a broker please don't ask for more than a point. We're looking to get repeat business from developers.

Overview in detail

The loan can be for the total project cost so long as the loan does not exceed 80% of the eventual value.

For credit rated, pre-leased, “household-name” development, assume the loan will be 100% of cost not to exceed 80% of ultimate value.

Recourse is negotiable.

The borrower will never be relieved from recourse for construction completion, environmental nor “bad boy” clauses.

There must be a clear path to exit.

The lenders want to charge a point going in and same at exit. (Everything is negotiable.)

Usually 18-24 -month term; can pay off sooner. Term can be extended at a charge.

The lenders want to establish a credit facility, not just do one-off.

The lenders must understand (be able to predict) the exit cap rate w/in a narrow range.

Usually, there is a about a two-point spread between yield on cost (NOI ÷ Total Cost) and exit cap rate (NOI ÷ Sales Price or Value). A 1.5% spread could be enough.

No dollar limit.

Anywhere in the USA and Eastern Canada. [e-mail] 440-637-5646