Calling all Commerical Mortgage Brokers!

[Kris Benson]

BP Team,

I am in the process of a refinance on an apartment community we built in Central NY.  We recently received two term sheets from our commercial broker and I am curious to get some feedback from the group if we are leaving anything on the table.

The refinance will cost us between 90-110K so trying to ensure we have our "ducks in a row"

I understand that it will be difficult to offer direct feedback on specific terms as it is dependent on the market, property, etc. but any information/guidance would be great.

Broker Fee in both scenarios is 1% of proceeds

Here is a summary of the two term sheets we got yesterday:

Option 1

Proceeds: $4,750,000

oRate: 4.904% Today

oTerm: 10 Years Fixed with 30 Year Am

LTV:70%

oPrepayment: Defeasance. This is very hard to prepay until the end of the term.

oLockbox: Rents go into here, then are cleared to be used by you after it clears the account. There is an annual service fee for this, which is not determined here. This is used in case you fail to keep your income at a certain level to meet the loan terms.

oGuarantee: Nonrecourse

oDeposit: $45,000

oLegal Fees: $25,000

oClose: 45 Days

Option 2

Proceeds: $4,580,000

Rate: 4.65%

oTerm: 10 years fixed with 30 year Am

LTV:70%

oPrepayment: 5,5,4,4,3,3,2,1,1 – open for final 90 days

oLockbox: None

oGuarantee: Nonrecourse

oDeposit: Will be around $10,000 once the terms are accepted and the application is sent out.

oLegal Fees: $5,800

oClose: 60 Days