Debt and Equity Financing
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Banks have long been a staple of the commercial mortgage market. They are competitive for many cash-flowing loan scenarios as well as for construction for strong borrowers.
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Credit Unions don't get the same star treatment as their Bank counterparts, but are often a very strong option for local commercial real estate, if not for larger institutional projects.
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Fannie Mae is a government-sponsored entity that supplies Multifamily loans through its various lending programs. One of the most popular is their Small Loans program for loans up to $5 Million.
Freddie Mac is a government-sponsored entity that supplies Multiamily loans through multiple lending programs, including their Small Balance program for 5-50 unit communities up to $7.5 Million.
CMBS lending is typically a fit for loans $3 Million or greater, on stabilized office, industrial, retail, hospitality, or multi-family assets. Maybe not the most fun, but very attractive numbers.
Crowdfunding portals are the new kids on the block, and their offerings vary pretty widely. Via StackSource, they can provide bridge loans, mezz debt, and construction funds.
There are more private lenders available for commercial real estate than at any other point before in history, and they bring a much more quick, flexible option to the market.
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HUD's multifamily loan programs have historically been difficult to obtain due to heavy paperwork, approvals, and long time-to-funding, but they represent an extremely stable long-term option.
Life Insurance Co loans are coveted for their long-term, low fixed rates. These lenders prioritize very stable property loans from extremely experienced, reliable borrowers.
The US Small Business Administration ("SBA") provides partial guarantees for loans to qualified businesses to develop, purchase, or refinance real property for operations. The SBA 504 program (only for real estate) and the SBA 7(a) program (can be backed real estate and other collateral are both popular with small business borrowers due to the high maximum leverage (90% LTC).
USDA is a government sponsored entity that provides debt financing to properties located in eligible rural areas which include all areas other than cities or towns larger than 50,000 people.
Real Estate Private Equity is a type of investment made from a private, non-publicly traded entity (or entities) that allows investors to pool their money together invest equity directly into real estate assets and projects.
Real Estate Investment Trusts (REIT) can be public or private entities that allow investors to access equity or debt investments into commercial real estate assets nationwide. REITs can provide investors with dividend-based income, competitive market performance, transparency, liquidity, inflation protection and portfolio diversification.
Ultra HNW Individuals understand the financial advantages from investing in real estate through debt and/or equity positions. They offer the highest degree of flexibility compared to other investment programs because the HNW individual makes the rules to determine where and how they want to place their capital.
Family offices understand the financial advantages from investing in real estate through debt and/or equity positions and can be more flexible than traditional capital sources. The families typically focus on wealth creation and wealth preservation via opportunities presented from trusted relationships.
Commercial Property Assessed Clean Energy is a state and local government financing program for energy efficiency and renewable energy improvements on commercial property. It typically serves a type of gap financing between senior loans and Sponsor equity.
Ground leases unlock the financial potential of land without the sponsor having to sell off their ownership of its "improvements" (i.e. the building). The ground leases are usually long-term (50-99 years) and allow developers to lease the ground and build or retain commercial property atop.
