Commercial real estate investors are challenged by the time
it takes to source a quality loan for their unique investment strategy. The Madison Group works for you to arrange alternative loan options from the nation’s top lenders, so you will feel
confident that you have chosen the optimal financing for your long term investment
goals.
The Madison Group is partnered with a diverse group of
lenders including commercial banks, life insurance companies, CMBS and local
banks. Our strong relationships with these lenders enable us to maintain a
healthy variety of nonrecourse loan products and terms. Our clients benefit
from competitive rates that will provide you with the most suitable commercial
loans to help preserve your working capital.
A nonrecourse loan may be the best loan structure to meet your goals.
A nonrecourse loan is a mortgage agreement in which the
collateral securing a loan is the sole source of repayment. The lender can’t hold the borrower or
guarantors liable in the event of a default. The lender can seize and sell the
property but can’t seize non-pledged property or assets from the borrower. This
type of financing is typically found on longer term, permanent commercial real
estate loans placed on a stabilized and performing asset.
Some Pros and Cons for Nonrecourse Commercial Loans
Pros | Cons |
No personal liability (except bad boy carve-out) | Defeasance or yield maintenance |
Longer amortizations & terms | Higher costs to close |
Assumable to a new owner | Reserves for TI & LC |
High LTV | Limited to certain commercial lenders |
Certainty of closing | Escrow and impound accounts for taxes & insurance |
At the Madison Group, we offer a wide range of commercial real estate financing options for investor and owner-user properties.
Nonrecourse commercial real estate loans can be used for commercial investments such as shopping centers, medical offices, office buildings, retail centers, industrial and warehouse, self storage, multi-family, and flagged hotels, to name a few. They may be used for acquisition or refinancing of a commercial real estate.
General Nonrecourse Lending Parameters
Limits | $1,000,000 minimum |
Rates | Competitive spreads over the 5-year and 10-year swap |
Terms | 5, 10, 15 and 30-year rate terms |
Amortization | 25 to 35-year amortization |
Recourse | Nonrecourse (subject to standard carve-outs) |
DSC Range | 1.03 to 1.35 with a 1.20 DSC on average |
LTV Limits | 80% LTV/LTC maximum – 85% with mezzanine financing |
Debt Yield | 7% Debt Yield – depending upon quality of the asset |
Property types | Apartments & Mobile Home Parks (Multi-family properties), Retail, Office, Industrial, Self-Storage, Hospitality, Industrial, Single Tenant, Credit Tenant |
Geographic areas | Most States |
How you benefit from working with TMG:
- Create greater cash flow and save time sourcing rates and terms that increase your cash flow
- We fully analyze your transaction so you avoid pitfalls and costly surprises
- Receive offers from more than one source
- Accessing multiple lending programs/institutions/lenders for financing options that fit your needs
- Assistance every step of the way with our team of experienced commercial real estate lending professionals