Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/128835
Even though a bridge property does not currently qualify for permanent fnancing, it should have a clear exit strategy through a refnancing with Fannie Mae, Freddie Mac, or HUD upon stabilization. In addition, properties that meet the following criteria will have an easier time qualifying for a bridge loan: • 100 units or larger; • less than 25 years old; and • well-located in a strong market. What should a borrower expect when it comes to loan rates and terms? For example, in Walker & Dunlop's Interim Loan Program, target loan amounts are in the $5 million to $35 million range with larger loans considered on a case-by-case basis. Loan term is up to two years, and the interest rate is a foating rate over the 30-day Libor index. Maximum loan to value is the lesser of 80 percent "as-is" value or 75 percent loan to appraised value upon stabilization. Maxi- mum loan to cost is 90 percent including costs associated with renovation. Success Story The Columbiana Ridge Apartments in Columbia, S.C. — a 100 percent Section 8 afordable housing property — was scheduled to receive a HUD loan to fnance signifcant renovations and help modernize the community. However, preparing and placing the bonds associated with the fnancing took more time than anticipated. Tis produced a scenario where the borrower had two weeks lef to close on the acquisition, but knew the bonds could not be ready in time. A 90-day bridge loan allowed the borrower to perform under the terms of its purchase contract prior to the closing of the placement of the bonds and the HUD closing. Building Bridges When looking for a bridge loan, investors should f nd an expert in this specialized fnancing arena. Te best bet is a capital source with an established track record as a lender for Fannie Mae, Freddie Mac, and HUD programs, and the ability to make bridge loans by leveraging its own balance sheet. In addition to experience and an established track record, sources for interim fnancing should be able to ofer unique loan products tailored to borrowers' specifc needs. When it comes to property acquisition or repositioning in today's improving multifamily market, interim financing can be the bridge to investment opportunity for multifamily investors who want their projects to move forward now rather than later. Jeffrey M. Goodman is executive vice president of Walker & Dunlop, a national commercial real estate finance company, with a primary focus on multifamily lending. Contact him at jgoodman@walkerdunlop.com. 2012 President's Cup CCIM Chapters earned the President's Cup Award in a competition conducted by the CCIM Institute. The President's Cup Awards program is designed to objectively recognize and reward achievements and member programs by CCIM Chapters demonstrating the highest degree of skill, ingenuity, and innovation in promoting the Institute's membership benefits. The following chapters earned the 2012 President's Cup Award. The three tiers are based on the number of Chapter members. The awards were presented at the Institute's Annual Spring Business Meetings held in Chicago, Ill. Congratulations to the following CCIM Chapters: TIER 1 1st Place - Houston/Gulf Coast CCIM Chapter 2nd Place - North Carolina CCIM Chapter 3rd Place - Illinois CCIM Chapter CCIM.com TIER 2 1st Place - San Diego CCIM Chapter 2nd Place - Middle Tennessee CCIM Chapter 3rd Place - Kentucky CCIM Chapter TIER 3 1st Place - Southern Nevada CCIM Chapter 2nd Place - Kansas CCIM Chapter 3rd Place - Utah CCIM Chapter May | June | 2013 15