UMB Capital Markets Group offers several long-term loans or leases that fall within our commercial mortgage financing area.
Institutional/Life Company Financing
A Life Company Debt Placement is a long-term, fixed rate, non-recourse loan appropriate for top-quality assets and for owners of those types of assets who are seeking lower leverage — less than 75 percent Loan-To-Value (LTV). Life insurance companies typically hold these loans in their general portfolio. These loans are often the most flexible, permanent structures available.
Life company capital is often priced at lower rates than other sources of permanent debt for real estate. Life companies can forward-lock rates, allowing them to provide a takeout to construction loans.
Real Estate Conduit Loan
A Real Estate Conduit Loan is a permanent, fixed rate commercial real estate loan structured on a non-recourse basis according to specific underwriting and documentation standards. These standards facilitate the loan’s ultimate securitization. A conduit loan is most competitive for owners of assets who are seeking higher leverage (greater than 75 percent LTV) or for assets that have a perceived higher risk, such as older properties. This capital source is often complementary to life insurance capital, providing a lending vehicle for assets that fall outside of the life insurance industry’s investment targets.
Credit Tenant Lease
A Credit Tenant Lease structure can provide maximum leverage with up to 100 percent financing. This lease is for owners of commercial property that is leased to a single tenant on a fully net-basis. Structured on a long-term, fixed rate, non-recourse loan basis, the underwriting of these loans focuses on the credit of the tenant more than the value of the underlying real estate. Therefore, a Credit Tenant Lease is best suited for tenants that are investment grade.
These transactions best serve companies who wish to enhance their operations through off-balance sheet financing. In other words, it is a conversion of a corporate owner’s real estate into cash. These transactions are structured using long-term leases that allow both flexibility to the lessee and preservation of the corporation’s core business capital. Terms can equate to 100 percent funding of existing real estate or construction of new properties (maximum tax and accounting benefits).
Questions about real estate financing? For more information, please contact us via phone or e-mail.
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