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Sourcing Lending on Acquisitions of High Vacancy Office Building Properties

Financing the purchase of the high vacancy office building is challenging.

Generally the most adopted route is through using some type of a shorter term bridge financing, with the lender focusing on what the funds will be used for and what the exit strategy will be.

The underwriting where available tends to follow this type of pattern:

Sized at $500,000 to $25 million.
Terms will vary widely between one to three years.
Loan-to-value at 65%.
Recourse.
Mainly geographic specific.

Two principal variations on this basic structure can be investigated :

A. Obtaining permission from the lender to place a borrower-obtained piece of secondary financing to supplement the first mortgage lien position which is provided by the bridge loan.

(For example, this might be accomplished through including a measure of seller financing. This might also be fashioned as an assignment of an ownership interest rather than a second mortgage lien utilizing a lien placed on the property), or...

B. Exploring a type of "participating loan"----i.e. where in return for the higher loan-to-value generated on the property (say 85% or so), the borrower gives to the lender a portion of the property cash flows. In the main, these loans have tended to be at from three to five years.

If you are pursuing an acquisition of a high vacancy office property, please feel free to apply online by clicking here. Get a fast response and great rates.