PERMANENT | FIXED RATE:
Permanent | Fixed Rate Financing is the core product that is utilized most throughout the commercial real estate industry. Permanent loans usually enjoy the lowest interest rates, longest terms, and longest amortization schedules. BCREM Capital works with Banks, Life Companies, Credit Unions, REIT’s, Debt Funds, Fannie Mae, Freddie Mac and more to supply the most diverse array of permanent solutions for their clients.
ADJUSTABLE | FLOATING RATE:
Adjustable | Floating-Rate financing usually utilizes the London Interbank Offered Rate (LIBOR). This product is very attractive to Borrowers who have a lot of upside in an existing property and need a short period of time to stabilize it. These rates have been historically low and have been very popular as they usually have minimal or no prepayment penalties. BCREM Capital assists borrowers so they may utilize these flexible structures for their short term needs.
Bridge financing are all types of flexible short-term financing strategies that may have a challenging and | or complex component to the transaction. BCREM Capital’s ability to provide this type of financing enables the borrower with the necessary time frame for the properties to be repositioned and stabilized, at which time a longer-term loan will be provided to pay-off the Bridge | Renovation loan. The duration of these loans typically ranges from six (6) months to five (5) years. Bridge lenders may be willing to underwrite to lower debt-service-coverage ratios (DSCRs) and lend on higher loan to costs(LTC). They do this when they believe that the borrowers’ business plan will increase the revenue from the property and increase the DSCR in future years.
MEZZANINE | PREFERRED EQUITY:
Mezzanine debt (also called subordinate debt) is a structured financing product used to increase leverage. It is generally higher risk than senior debt, and therefore demands higher returns. Mezzanine debt can be secured by a second trust deed, and is therefore subordinate to the senior mortgage, but primes any equity. Mezzanine loans may also be secured by a pledge of partnership interest in the ownership entity. Unsecured mezzanine is treated as preferred equity. Mezzanine financing is limited by ratios based on the combined senior and subordinate debt. The most important of which include loan principal to property value (LTV), and annual net operating income to annual debt service (DSCR). Subordinate lenders accept some minimal risk to their principal balance, and may be willing to accrue some portion of their interest payments. There are numerous Mezzanine and Preferred Equity structures. BCREM Capital team members are experts in designing higher level capital stacks.
JOINT VENTURE EQUITY:
Introducing strategic capital for specific projects- development, value-add, or stabilized assets- allows our clients to get maximum leverage on their capital and opens up opportunities to pursue larger deals versus being limited to conventional family and friends deals. JV money typically will invest between 90-95% of the required equity. JV Equity is available in all major product types (retail, office, industrial, hotel, multi-family, condos).
Construction financing is a short-term loan utilized by borrowers to finance the costs of building an existing building | facility from the ground up. Every loan varies depending on the product type and the amount of time it takes to complete the building process. For most construction loans the borrower is required to provide some level of recourse. BCREM Capital has the ability to provide higher leverage and non-recourse construction financing for a higher cost.
BCREM Capital believes that the ability to provide Forward Commitments will continue to gain in popularity since we are in a rising interest rate environment. Most borrowers who are already committed to an older loan or are 6 months to a year away from completing a project look to this financing to alleviate the future interest rate risk that may occur. A forward commitment is a written promise from a lender to provide a loan at a future time. The forward is typically a fully underwritten loan commitment with predetermined proceeds, term, interest rate, and loan documents. Forwards are valuable instruments that extend the faith and credit of the lending institution to help borrowers manage financing risk and exposure to variable market conditions. As such, forwards include a premium cost by which the lender can purchase hedging instruments and justify the risk exposure they are required to assume by extending the pledge. Forward commitments are most frequently used for development projects to secure take-out debt upon project completion. Locking in a loan amount and an interest rate during the construction phase helps the developer reduce the considerable risk exposure involved in any development project.
BCREM Capital arranges alternative financing for real estate owners, developers and entrepreneurs. Real estate secured financing programs are structured to meet the needs of each borrower.
Many of our clients are buying land to develop that often will have entitlement risk. BCREM Capital tracks land lenders that can underwrite around these risks and provide 12-24 month loans between 50-75% of Land Cost or Appreciated Value. Typically these loans range between 7.5%- 10% in interest rate with recourse. Mon-Recourse may be available.