Non-Recourse Loan Capital Stack

[Thomas Alexander]

Is there a capital stack on a non-recourse loan? If they say 65% of the capital stack are they saying that 65% of the property will be non-recourse?

[Alan Blair]

Hi Tom,

It sounds like all three of your retail centers are very near to being stabilized. That fact that you mentioned national tenants indicates a better class of construction. These are all important factors when seeking standard Non-Recourse debt. With these factors in place it is possible to find a traditional lender (hence lowest possible rates) to offer you non-recourse permanent first mortgage. Generally the maximum loan you will be able to get is 65% LTV (Loan to Value)

1st Choice:

Due to all the regulatory issues banks are facing these days, they will not publicly offer "non-recourse" loans, some banks will do them on a one-off basis. For Banks you need to knock on doors and ask... You will have better luck with smaller local banks, that know your projects and would like to have the loans on their books. Better if you have a relationship with the Bank

2nd Choice:

Insurance company lenders. You will probably need a broker that has a list of various size Ins Co lenders that will lend in your state.

3rd Choice:

Wall Street. There are numerous brokers, that can get you as much as 75% LTV new first mortgage quotes, that will be secularized and sold on wall street. Great rates too. The down side for us, is that there are numerous note provisions that we would prefer not to deal with. The other reason is that once the deal is closed you no longer are dealing with "people". Then it is a giant bureaucracy.

Good Luck,

Alan