Condominium Conversion Loan Program
|Product Type:||Apartments and condominium buildings with condominium approval or with adequate cash flow to service debt during the entitlement process.|
|Purpose:||Finance retail sellout of individual condominium units, including acquisition and rehab.|
Loan amount - $1,000,000 to $15,000,000 (will consider larger
transactions on a case by case basis)
|Interest Rate:||Index – Prime + Margin – 0 to 2.00%|
|Fee:||Minimum 2%, typically 3%|
|Recourse:||Guaranty required from creditworthy individual or entity.|
|Term:||Up to 24 months, tied to forecast absorption; extensions negotiable.|
|Amortization:||Interest Only. Repayment from unit sales; 115% acceleration minimum, net sales proceeds preferred.|
|Loan to Value:||
75% of “As Complete” or “Bulk” project value; 65% of aggregate retail
|Loan to Cost:||80% of Cost, up to a maximum of 100% under certain conditions.|
|2nd Financing:||Mezzanine financing up to 90% - 100% of cost; no second trust deeds permitted.|
|DSCR:||Prefer minimum of .75:1 DSCR for units after renovation tested at equivalent multifamily financing rates; this will vary depending upon regional market differences.|
|Presale:||None Required. A pre-negotiated minimum number of units must be sold with contingencies removed prior to first unit release.|
|Prepayment:||No prepayment penalty or exit fees unless property is refinancing; then 1% if repaid during year 1.|
Fixed processing fee includes fee includes all required standard third party reports and processing including credit reports, cost review, and loan documents. (not including title insurance, recording fees, and closing escrow)
Loans over $3 million, fee is $7,500 plus appraisal fee, Phase I environmental audit, cost of review, title insurance cost and closing escrow cost. Actual inspection costs will be charged for all loans with funding for construction costs.
Demographic and Market Information on the subject’s competitive market area as apartments and the competitive sales figures on the condominium market to support the conversion to condominiums.
Description of the Property, including square footage, number and type of units, year built, and/or renovated, description of construction details, HVAC, and paving information, including total number of spaces, covered, and handicap spaces.
Description of the Borrower, Key Principal, and Property (Marketing) Manager including resume’ with real estate experience and financial capacity, current financial statements, most recent two (2) years of income tax returns, and credit reports.
Neighborhood map indicating location of the Property and competitive properties. Copy of site plan, building layout, and floorplans.
Color photographs (including aerial photograph, if available) of the property, surrounding area, building interior and exterior, and parking areas.
Property Operating Statements and Occupancy for the (i) past two (2) calendar years, (ii) current year-to-date actual and remainder of the year budget, and (iii) the trailing 12-month statements, if available.
Current Rent Roll (or other evidence of leasing status):
* Breakout of units and rooms
* Average square footage of units and rooms
* Occupancy of units
* Current average annual or monthly rental rate
* Estimated current market rental rate
Schedule of all significant capital expenditures including costs (i) incurred during the past two (2) years, and (ii) a detailed budget for the next twelve (12) months on the renovation and improvements to be completed, (iii) coordinated with a draw schedule.
A Use of Proceeds Statement and a Proforma Cash Flow to include an inventory price list of the individual units, the monthly estimated sales, any pre-sales and the terms of such pre-sales, escrow requirements, detail of all expenses on a monthly basis for the term of the loan request. Such expenses should include estimated monthly interest payments and reserves.
Information on comparative properties including size (square footage, # of units), year built, distance from subject, rental rates, occupancy rates, and sales prices of condominiums recently built or converted.
Copies of recent appraisal, engineering and environmental reports, if available. (Do not order new reports.)
Date acquired (if refinancing), original purchase price, and capital improvement costs since acquisition. (If purchasing) a copy of the purchase contract.
Tel: 800-366-7769 Fax: 830-796-4774