Real Estate Financing

We understand that the search for a commercial financing that best meets your individual investment needs, goals and property constraints is not easy. Our commitment is to provide our valued clients with reliable financing, honest advice and expert execution in order to help them achieve their financial goals. Midwood Capital is able to offer a diverse mix of commercial real estate loans to meet the individual borrowing needs and investment objectives of its borrowers.

Strong origination volume enables us to negotiate the most favorable rates, terms and costs. Commercial mortgage loans are available from bank, non-bank, life companies, pensions, REITs, CMBS and other institutional investors for most commercial property asset classes. Over two decades of knowledge and experience ensure we close on rate, term and cost.

Permanent Loans

Bridge Loans

Construction Loans

Mezzaznine Loans
Agency Loans
CMBS Loans

Permanent Loans

A permanent loan is defined as a first mortgage on a piece of commercial property that has some amortization and a term of at least five years. Most commercial permanent loans are amortized between 25 – 30 years. The loan product makes it easier to budget, especially over the long term, and it offers stability across an ever-fluctuating market.

Permanent loans usually enjoy the lowest interest rates among the various type of commercial real estate loans. In large part this is because permanent loans are usually garden variety loans, with no special risks in the deal. The property has already been constructed and almost completely leased out.

Permanent loans are usually made by either life insurance companies, conduits, banks, or credit unions. In terms of the number of commercial loans written, banks are by far the most active makers of permanent loans. We listed the types of permanent lenders in the order of their typical rates. In other words, life insurance companies offer the lowest interest rates on permanent loans, followed next by conduits, banks, and credit unions.

Bridge Loans

A bridge loan is defined as a first mortgage loan on a commercial property with a term of just six months to three years. Bridge loans give the owner some time to effect some change to his property, such as renovating the property or finding a tenant. Once the troubling issue with the commercial property is fixed, the owner will usually either sell the property or come back and secure a permanent loan to pay off the bridge loan. Bridge loans are typically more expensive than permanent loans.

Construction Loans

Construction – Midwood Capital is specialist in several areas, one of which is in providing advice to developers and arranging optimal construction financing for ground-up development of rentals and condominiums in NY and NJ. We also handle many conversions – most commonly the gut-renovation and conversion of loft, office or other types of commercial buildings to residential, for-sale product.

Our clients are successful developers who rely on our firm to arrange the most advantageous terms for their construction loan. We also often help to create together joint ventures and to source equity as well as debt for qualifying projects.

Personal guarantees are usually required for smaller scale projects, while larger deals can often be placed with limited recourse, and in some cases on a non-recourse basis.

Mezzanine Loans

Mezzanine Loans – a Borrower may find that their existing first mortgage has a yield maintenance prepayment penalty that effectively prevents refinancing, and that the first mortgage Lender will not allow a second mortgage. In this situation a mezzanine loan can free up trapped equity allowing the Borrower to leverage their assets and take advantage of attractive business opportunities.

Alternatively, if a Borrower is seeking higher leverage for an acquisition than a bank or conduit Lender is comfortable with, the answer may be a lower loan-to-value institutional first mortgage in conjunction with a Mezzanine loan. We can structure both parts of a bank/mezzanine loan, including negotiating the terms of the intercreditor agreement.

Agency Loans

Agency Loans – like Fannie Mae and Freddie Mac are government-supported loans that guarantee mortgages. The mortgages represented by these securities are guaranteed by the issuing agency that the principal amount of the loan will be repaid.

Many multifamily investors analyze properties and think about their returns with an agency loan product in mind. Up to 80% LTV, non-recourse, competitive rates… what’s not to like?

But agency underwriting guidelines are pretty stringent. Properties are scrutinized for vacancy and deferred maintenance, and need to be stabilized (typically 90%+ occupied for at least three consecutive months).

Many major agency lenders are now offering bridge loan products in order to help borrowers lock down financing on quality investments that will soon be ready for a loan guaranteed by Fannie Mae or Freddie Mac (within 1–3 years), but doesn’t quite pass muster yet. These “bridge to agency” loans often come at a cheaper rate than a typical bridge loan, and are often non-recourse, a strong value-prop to multifamily investors.

There is one catch, though. The bridge loan is intended to feed into that lender’s own agency loan offering, so they’ll typically tie off the end of the loan term with an exit fee, which is waived only if the borrower refinances into their agency financing. Refinancing elsewhere or selling the property upon maturity become less profitable options.

CMBS Loans

CMBS – Also known as Conduit loans bundle a number of loans and securitize the pool of loans. While there are disadvantages to CMBS – they generally will lend more dollars than other lenders, offer a longer amortization and most of the loans are non-recourse. The minimum loan size is generally $1 million, while some lenders have a higher minimum. This lender usually requires a Lockbox to be set up at closing. The Lockbox is not generally activated until or unless there is a Trigger Event (e.g. major tenant not renewing, a default). When you need maximum dollars or maximum amortization this loan product is worth investigating.

When considering this type of lending, it’s important to know that while there is one CMBS market, not all conduit lenders are the same. Since we are consistently quoting these loans and working with dozens of these lenders, we know who will be the most competitive and in what areas we can push. Contact us directly to get a highly competitive quote today.

CMBS loan terms, structure, and accessibility

  • Loan amounts from $1 million upward
  • Every city, town, and rural area in the USA
  • Property types include multifamily, retail, office, industrial, hospitality, etc.
  • 5, 7, & 10 year fixed periods, ballooning or refinancing at the end
  • Up to 30-year amortizations with interest-only periods a consideration
  • Non-recourse, subject to bad-boy carve-outs
  • Reserves for taxes, insurance, & cap-ex
  • Yield maintenance OR defeasance prepayment

The interest rate is always fixed (i.e. never variable) and amortized generally over 25 – 30 years. However, the loan terms are ranged between 5 to 10 years, with 15 years considered extraordinarily long. Sometimes an interest-only period of payment is included.