Commercial Real Estate Finance

  Chapter 11 Bankruptcy

  Family Transfer

  Rate & Term

  Cash Out Refinance

  Tax Sale

  Property Income & Expense Section:

  Total Number of Rental Units

  Current Occupancy Rate

  Current Vacancy Rate

  Loan to Value (LTV)

  Gross Building Area (GBA)

  Total building floor area square feet

  Usable Square Footage (USF)

  Rentable Square Footage (RSF)

  Annual Gross Scheduled Income (GSI)

  Money generated by the occupied units

  Potential income lost due to vacancy

  Annual Gross Operating Income (GOI)

  Total Annual Operating Expenses (OE)

  Net Operating Income (NOI)

  Annual Debt Service (ADS)

  Monthly mortgage payments

  Debt Coverage Ratio (DCR)

  Capitalization Rate (Capx)

  Current Mortgage Holder Section:

  Current Mortgage Holder (Bank / Capital source)

  Contact Person

  Street Address

  City, State, Zip Code

  Website

  Email Address

  Telephone Number

  1st Current Mortgage Balance

  1st Original Mortgage Balanc

  Date of Original Mortgage

  Current Rate & Term

  Any Late Mortgage Payment

  Mortgage in Default / Forbearance

  Is the Property in Bankruptcy

  Applicant Information Section:

  Company Name

  Company Street Address

  City, State, Zip

  Phone Number

  Email Address

  Company Web Site

  State of Incorporation

  Date of Incorporation

  County

  Countr

  Borrower Name

  Professional Resume

  Personal Financial Statement

  Source[s] of income (employer)

  Net Worth

  Annual Gross Pay

  Liquid Assets (Cash)

  Liabilities

  Years of Business Experience

  Credit Score (FICO)

  Bankruptcy in Last 10 Years

  Judgments in the Last 10 Years

  Any Litigation or In Last 10 Years

  Income Tax Returns Current & Available

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  The Loan Submission Process

  When you submit your commercial real estate loan application, it may seem like it disappears into a black hole.

  If you need help to prepare and package your commercial real estate loan proposal reach out to us at winstonrowe.com

  Some capital sources like to prequalify potential borrowers to determine how much they can afford, with an initial telephone or personal interview.

  This will also give you and your capital source an opportunity to see which loan program would be most appropriate for your needs.

  The capital source will gather basic information, such as your income and existing debts. To initiate the loan process, you must then complete and submit a loan application.

  Once your application is received, a loan officer or processor will review your credit reports, the amount of available collateral, and your income.

  Your loan officer will determine if any additional documentation is required. There almost always is.

  If you are purchasing real estate, you may also need to submit preliminary environmental reports, area maps, title reports, property appraisals, and lease summaries.

  If you are going through a broker, he or she will package your loan request and submit it to several capital sources for approval.

  After your commercial loan package is submitted to the decision makers — either a loan committee or underwriter — the processor will present you with a letter of intent or term sheet.

  This is a formal document intended to ensure that all parties involved (the capital source and your company) are on the same page.

  The letter of intent may include the names of involved parties, amount of financing, type of security (collateral), and other key terms.

  Decisions are usually made in one to five days. However this is a client driven process. If you do not submit supporting documentation correctly or in a timely manner, your financing proposal will not have a positive outcome. Also, during the underwriting process, you may need to furnish additional documentation.

  After all third-party reports are successfully completed and underwriting conditions are satisfied, the final loan package is resubmitted to the loan committee for final approval.

  At this point the capital source may issue a final full loan commitment. If your loan is approved, your closing agent, who may be an attorney, a title company, or escrow company representative, will receive closing documents.

  Your closing agent will record or file deed transfers and mortgages, order title insurance, coordinate the exchange of funds, and arrange for you to sign the loan documents.

  Closing can take place within days of approval or underwriting. At the closing, the capital source funds the loan with a cashier’s check, draft, or electronic wire transfer.

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  Winston Rowe and Associates Authors Bio

  Winston Rowe & Associates is a no upfront fee professional consulting firm that performs an initial due diligence review and analysis for commercial real estate transactions.

  With a core focus on flexibility, we really want to be able to find a way to help everyone who comes to us find a funding solution that meets their needs.

  The best funding solutions occur when we combine data with consultation and common sense.

  That's why Winston Rowe & Associates actually wants to speak with clients for free, so we can truly understand your business and its distinct needs.

  We have access to a full spectrum of capital solutions and sources nationwide; check us out on line at winstonrowe.com

  If you have an idea for an eBook subject please feel free to let us know.

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  Glossary of Commercial Loan Terms

  A

  Adjoining

  In actual contact with another object (i.e., attached). Same as “Contiguous”.

  Agent

  An individual/entity who transacts, represents, or manages business for another individual/entity. Permission is provided by the individual/entity being represented.

  Assignee

  Individual to whom a contract is assigned.

  Assignment

  The manner by which a contract is transferred from one individual to another individual.

  Assignor

  An individual who transfers a contract to another individual

  B

  Build Out

  The construction or improvements of the interior of a space, including flooring, walls, finished plumbing, electrical work, etc.

  Building Permit

  Written government permission to develop, renovate, or repair a building.

  C

  Cancellation Clause

  A provision in a contract (e.g., lease) that confers the ability of one in the lease to terminate the party's obligations. The grounds and ability to cancel are usually specified in the lease.

  Capital Improvement

  Any major physical development or redevelopment to a property that extends the life of the property. Examples include upgrading the elevators, replacement of the roof, and renovations of the lobby.

  Capitalization Rate (Cap Rate)

  The value given to the property when the Net Operating Income (NOI) is divided by the current market value or sales price. A cap rate can be used as a rough indicator of how quickly an investment will pay for itself.

  The higher the cap rate, the better. Example: A property has an NOI of $100,000, and the price is $1,000,000. The cap rate would be 10% ($100,000/$1,000,000 = 1
0%). Based on this calculation, you would see a return in 10 years.

  Certificate of Occupancy (CO)

  The government issues this official form, which states that the building is legally ready to be occupied.

  Chattel

  Household goods, including personal property such as lamps, desks, and chairs.

  Common Area Maintenance (CAM)

  This is the amount of additional rent charged to the tenant, in addition to the base rent, to maintain the common areas of the property shared by the tenants and from which all tenants benefit.

  Examples include: snow removal, outdoor lighting, parking lot sweeping, escalators, sidewalks, skyways, parking areas, insurance, property taxes, etc. Most often, this does not include any capital improvements that are made to the property.

  Commissions Split

  An agreed upon division of commissions earned between a sales agent and sponsoring broker, or between the selling broker and listing broker.

  Example: The seller of a $1,500,000 building paid a $75,000 commission at closing. The commission split was 50/50 between the listing and selling brokers. Each broker then split the fee received with the sales agent responsible for the sale, in accordance with each firm's commission split schedule.

  Contiguous

  Touching at some point or along a boundary

  Contingency

  A requirement in a contract that must occur before that contract can be finalized

  Contract

  A legal agreement between entities that requires each to conduct (or refrain from conducting) certain activities. This document provides each party with a right that is enforceable under our judicial system.

  Covenants

  Wording found in deeds that limits/restricts the use to which a property may be put (e.g., no bars).

  D

  Deed

  A signed, written instrument that conveys title to real property.

  Deed Restriction

  An imposed restriction in a deed that limits the use