Commercial Real-Estate Permanent Financing
Permanent commercial loans are flexible mortgage options for financing commercial properties.
Banks, credit unions, or savings institutions offer them and can be used by both novice and experienced
commercial property owners as the first-lien financing option.
Life insurance companies offer aggressive financing for Class A commercial assets in top markets, with lower
leverage and shorter amortizations. CMBS loans have the highest leverage and most extended amortization of up
to 30 years, but higher rates due to liquidity issues. Banks offer a good combination of the two options and may
be more aggressive for more larger transactions.
Permanent Financing Terms
Eligible Properties: | Multifamily, Office, Retail, Warehouse/Industrial, Hospitality, Medical/Healthcare, Self-Storage |
Loan amount range: | Minimum $2,000,000 |
Interest Rate: | Fixed rates vary. Floating Rates from 2.30% over LIBOR. See current LIBOR Rates. |
Loan Term: | 3 to 15 years |
Amortization: | 10 to 30 years |
Maximum LTV: | 80% |
Minimum DSCR | 1.20x |
Recourse: | Can be non-recourse, limited-recourse or full recourse. |
Prepayment: | Can be no prepay penalty, step-down, or flat-rate. |
Here are the institutions that provide permanent financing options:
- Life Companies
- National and regional banks
- Institutional lenders
- Pensions funds
- Private debt funds
Permanent Financing Pros
- Lowest rates
- Longest terms
- Best leverage
- Longest amortizations
- Fixed rates
Permanent Financing Cons
- Call protection (expensive prepayment penalties)
- Limited ability to recapitalize (with sale or refinance)