CMBS / Agency / Insurance Companies

You may want to consider WNMC’s CMBS or agency perm financing.

Both options offer non-recourse loans, which means you are not personally liable for the debt in case of default. Both options also offer competitive interest rates, long-term amortization, and flexible prepayment options.

However, there are some differences between CMBS and agency financing that you should be aware of.

CMBS financing is issued by private lenders and securitized into bonds that are sold to investors. CMBS loans can finance almost any type of commercial property, including multifamily, office, retail, industrial, and hospitality. CMBS loans typically have higher leverage, up to 80%, and lower debt service coverage ratios, as low as 1.25x. CMBS loans also have more generous interest-only periods, up to 10 years, and more lenient cash-out refinancing rules. However, CMBS loans also have higher interest rates, starting at around 5.5%, and higher fees, up to 5% of the loan amount.

CMBS loans also have more complex servicing and reporting requirements, and may involve a special servicer in case of default or modification.

Agency financing is issued by government-sponsored entities (GSEs) such as Fannie Mae and Freddie Mac, and backed by their guarantee. Agency loans are mainly focused on multifamily properties, but they also have specialized programs for senior housing, student housing, cooperative housing, and affordable housing. Agency loans typically have lower leverage, up to 75%, and higher debt service coverage ratios, as high as 1.55x. Agency loans also have lower interest rates, starting at around 3.75%, and lower fees, up to 2% of the loan amount. Agency loans also have simpler servicing and reporting requirements, and may offer supplemental financing options. However, agency loans also have stricter borrower eligibility criteria, such as net worth and liquidity requirements, and more limited interest-only periods, up to 5 years. Agency loans also have more restrictive prepayment penalties, such as yield maintenance or defeasance.

In summary, CMBS and agency financing are both attractive options for multifamily property owners, but they have different advantages and disadvantages.

You should weigh the pros and cons of each option carefully, and consult with WNMC to find the best fit for your needs.