This is a segment of Bank that focuses on non-recourse permanent financing for stabilized properties - typically small balance.
- Markets: Former Washington Mutual footprint, which means West Coast plus Denver, Chicago, Minneapolis, Milwaukee, Washington DC, NYC, and Boston.
- Deal Types: Stabilized
- Loan Sizes: $1M to $50M, but most are $1M to $15M since it's difficult to compete with the agencies and insurance companies at the larger loan sizes.
- Asset Types: Multifamily, industrial, retail, and office.
- Leverage: Typically DSCR constrained. DSCRs are approximately 1.25x for MF, 1.30x for industrial, 1.40x for retail, and 1.60x for office.
- Term: The loans are 10 to 15 years and are fixed for the first 3, 5, or 7 years and then become floating and open to prepayment.
- Pricing: MF is generally 1.75% to 2.00% over the 3, 5, or 7-year Treasury assuming there's no prepay flex. Other asset types are 2.25% to 2.50% over the corresponding Treasury.
- Prepayment: Flex prepay generally adds 15 bps to the spread. They'll provide a stepdown schedule based on the term. For example, a 3-year fixed-rate deal would be 3-2-1. To be clear, your loan would be fixed for those three years and then converts to floating and is open to prepayment.
- Competitive Advantages: Very low closing costs. They have a 0.125% processing fee that essentially covers everything. From a recent quote, "We do not require a legal opinion, ALTA survey or engineer’s report. No radon testing. Phase I report is reviewed for no fee pending acceptance. The report doesn’t need to be assigned to Chase. No zoning report. No legal fees. No other third-party reports are required unless we see something of concern. No tax returns."
