large multi refi...need help understanding Yield Maintenance

[Isaac S.]

Hey BP!

Hope all are well and family and loved ones, too!

My question is regarding a refi/cash out on a multi tenant with 37 units, based on rent roll and comps, my loan broker and I estimate the LTV to be conservatively at 55%, 10 year fixed 3.48, 5 years IO, non-recourse, assumable at 1%...

I love this loan for my particular situation...BUT, it has yield maintenance up through 9.5 years.

According to the loan broker, this means if I want out of the loan, in the event I want to dispose of the asset, I will be on the hook for the difference in yield the lender would get if they had the capital to lend at the rates of that future time.  It requires a formal request to the lender at that future time, at which point they determine the amount I would be liable for.

If I understand him, this is not as big of a deal if the future interest rates for the 10 year note are higher than the current .75% or close to the same amount, but, it is a potential problem if that 10 year is lower.

Am i understanding this correctly? Is their any way of determining a ballpark amount? Any other advice regarding this types of 10 year fixed balloon loans?

Thanks for any and all advice!