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Securing financing shouldn’t be one of those challenges. While the allure of securing financing by giving up a bit of equity might seem attractive, project developers need to look at the long-term cost of that dilution when determining what is going to be more profitable. And debt financing most often offers the better results.
Nov 6, 2023 · While the interest rate is important, the loan-to-value ratio (LTV) – or the percentage of the property’s value that the bank will finance – is crucial. Banks may finance from 75% to 100% of the value of commercial real estate, depending on the building’s condition, resaleability and other factors. However, lenders generally consider ...
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- What Should I Consider When Looking to Refinance?
- How Available Is Debt in The Current Market?
- Should I Draw on My Line of Credit?
- What Should I Do If I Can’T Meet My Loan Covenants?
Interest rates are one of the best reasons to refinance. Typically, refinancing is a good idea if you can reduce your rate by 1-2%. However, other items to consider are the terms of your current loan and if you’re in a position to get more favorable terms. Can you move to a fixed rate instead of a variable rate, extend the length of your loan, remo...
Some lenders have moved to the sidelines as they work to assess the uncertainty and the level of risk they’re willing to take. Many banks and government-sponsored enterprises are still in the market, while far fewer commercial mortgage-backed securities and debt funds are looking for new opportunities. Lenders will be keenly aware during their unde...
Because it’s hard to predict how severe the slowdown will be and how long it may last, many companies are assessing how to access available resources as well as short-term liquidity. A strain on both availability and timing of new debt could make it difficult to count on new loan proceeds to help with shortfalls caused by the struggling economy. Wi...
A breach of a covenant could result in your lender declaring the loan in default and demanding early payment. Be proactive and address the issue as it arises. Covenants may require adherence to cash flow requirements or other financial metrics. Look at your loan covenants now and project out for the rest of the year before talking to your lender. A...
May 9, 2024 · A significant amount of commercial real estate debt is expected to mature in Canada over the next few years. Globally, more than $3 trillion of real estate debt will come due for repayment before the end of 2025.¹ As that happens, many loans will face higher interest rates on renewal.
Feb 19, 2024 · 3. Loan Origination Platforms. Using loan origination platforms is a unique and relatively new real estate debt strategy. Think of this strategy as an online loan brokerage system that connects borrowers with individual or institutional investors, bypassing banks and traditional funding sources.
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January 2024 – 29 min listen. While commercial real estate markets continue to face cyclical and structural headwinds, real estate debt may prove to be a bright spot for investors in 2024—benefiting from attractive valuations and increased institutional take-up of the asset class. Nasir Alamgir explains.
