Commercial Funding
Commercial Funding - Guidelines
The commercial Market subdivides into the type of project, e.g. retail, offices, manufacturing, warehousing, leisure and many other subcategories. The project may well contain a number of the above and be classified as a mixed use project.
Commercial lenders' primary interests are the quality of the tenants and their commitment to the property, both in terms of length of commitment and obligations to its maintenance whilst in occupation.
The Prime Commercial Market
Considers property where the tenant(s) have an institutional rating, thereby (hopefully) ensuring reliability of the rental income.
Availability of Funding
Lenders quite naturally are very keen to lend into this prime market. The level of funding is determined by a number of factors such as length of lease outstanding, quality of building and rent achieved combined with any quantifiable rental increase contained within the lease. These key factors help to establish whether a lender will allow financial exposure to the property at lease end (known as residual exposure) thereby softening the repayment structure.
The Secondary Commercial Market
Every property other than the prime market is swept up in this category. Could be a prime location with local tenants, a retail parade of shops with uppers, multi let industrial with tenants on short lets, etc.
Availability of Funding
Many lenders will not even consider these asset classes but those that would, take a very cautious approach to loan-to-value (LTV) and continuity of income (normally established by past performance and history of occupation)
30.4 million mezzanine to replace equity - strong pre-sales
