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K2 Capital provides income-producing real estate access to the capital markets for fixed-rate loans via our network of over two hundred Banks and Credit Unions, Agency Loans (Fannie Mae and Freddie Mac) Commercial Mortgage-Backed Securities (CMBS) intermediaries, and Private Debt Funds.
Leverage K2 Capital’s network and expertise to design the permanent financing structure that makes sense for your investment property.
K2 Capital offers traditional bank loans through our network of over 200 banks and credit unions throughout the United States.
1. Speed: It takes time to build quality lending relationships. K2 Capital has invested in those relationships on your behalf. We know who is lending, what their current lending criteria is, and will source your funding request to the right lender without wasting your time or theirs.
2. Packaging: Successful business lending is about listening, developing, and communicating the borrower’s lending story. Every lender has preferences regarding the type of stories they are interested in financing. Our team helps our clients craft their story and put it in front of the most receptive lending audience.
3. Negotiation: Our business is securing financing for our clients. Therefore, we are keenly aware of the market rates and our lenders risk tolerance. We leverage this knowledge to obtain the best terms for our clients.
1. Stringent Requirements: Banks often have strict lending criteria, which can include high credit score requirements, proven cash flow, and a solid track record. These criteria can be challenging for some businesses or investors to meet.
2. Interest Rate Risk: If the loan has a variable interest rate, there is a risk that the interest rate could increase over time, which would raise the cost of borrowing. Even fixed-rate loans can be risky if the rates decrease significantly after locking in a higher rate, as this would mean paying more in interest compared to new loans issued at the newer, lower rates.
3. Prepayment Penalties: Some bank loans include prepayment penalties, which can make it expensive to refinance or pay off the loan early if you come into the opportunity to do so.
4. Loan Covenants and Restrictions: Bank loans often come with covenants or restrictions that can limit the owner’s flexibility. These might include requirements to maintain certain financial ratios, restrictions on further borrowing, or limitations on tenant mix and lease terms.
5. Costs and Fees: There are usually various fees involved with securing bank financing, such as origination fees, application fees, and appraisal fees, which can add up and increase the overall cost of the loan.
K2 Capital will leverage our knowledge of the markets, along with your goals to help mitigate the costs associated with traditional bank financing for your commercial property.
Commercial Mortgage-Backed Securities (CMBS) loans are loans that are secured by a mortgage on a commercial property. These loans are then pooled together and sold on the secondary market as bonds to investors.
1. Higher Loan Amounts:
CMBS loans often offer higher loan-to-value (LTV) ratios compared to traditional loans, allowing borrowers to finance a larger portion of the property’s value.
K2 Capital offers CMBS conduit loans for loan amounts from $2 million to $100+ million.
Loan amounts from $1 million-$2 million are available on a case-by-case basis.
2. Unrestricted Cash Out:
CMBS conduit loans allow for unrestricted cash-out on refinances in which the new CMBS conduit loan amount is greater than the loan balance being paid off.
For example, if a shopping center worth $10 million is refinanced with a 75% loan-to-value CMBS conduit loan ($7.5 million) and the existing loan balance is $5 million, the $2.5 million of excess loan proceeds are provided to the borrower without restriction on what the excess funds can be used for. Many commercial lenders do not allow for unrestricted cash out.
3. Fixed Interest Rates:
CMBS loans come with fixed interest rates, providing borrowers with predictable monthly payments.
4. Non-Recourse:
All CMBS conduit loans are non-recourse (no personal guarantees), meaning that the lender can only claim the collateral (the property) in case of default and cannot pursue the borrower’s other assets. Most commercial lenders require that a commercial loan be 100% guaranteed personally by all the individual owners of the property. In the event of a default and foreclosure, if the lender does not recover the full loan balance through a sale of the property or the loan, everyone is personally responsible to repay the shortfall, and the lender can easily get a judgment to compel the individuals to pay. With a CMBS conduit loan, the individuals do not have any personal liability to repay the loan in the event of default and foreclosure
5. Availability:
K2 Capital can arrange CMBS Conduit Loans for all types of commercial real estate, including:
6. Quick Closings:
CMBS loans from K2 Capital typically can close within 30-45 days.
CMBS loans often include significant prepayment penalties, making it costly for borrowers to refinance or sell the property before the loan matures. The prepayment penalty for a CMBS conduit loan is Treasury Defeasance or Yield Maintenance.
If you’re looking for a multifamily real estate loan, you may wish to consider an agency loan. Agency loans are loans backed by government-sponsored enterprises (GSEs), such as Fannie Mae or Freddie Mac.
1. Lower Interest Rates: Agency loans typically have lower interest rates than other types of loans, such as conventional financing. This is because agency loans are backed by GSEs, meaning that lenders themselves take on far less risk than they would with a conventional mortgage.
2. Long Amortization: Agency loans typically offer amortization periods of up to 30 years. This generally keeps your monthly payments relatively low, increasing your cash flows. However, be aware that at a standard, 10-year (or shorter) term, you may need to pay a balloon payment as the mortgage matures.
3. Low Down Payment: Another benefit of agency loans is that they often require a lower down payment than other types of loans. This can be helpful if you don’t have a lot of cash on hand, or if you wish to retain capital to invest in upgrades or expansions of a property.
4. Flexible underwriting: Agency loans have flexible underwriting standards, which means that you may be able to qualify for a loan even if you don’t have perfect credit
K2 Capital provided permanent finance for both commercial and residential stabilized properties via private debt funds in all 50 states and are typically available for properties with a minimum occupancy of 85%. Loan terms range from 5 to 15 years and amortization periods up to 30 years, with interest only options available.
In short, flexibility. Private debt arrangements are typically more flexible than traditional bank loans. Lenders can tailor the terms to fit the unique needs of the borrower, such as offering longer maturities or flexible repayment schedules. Private debt lenders can also customize loan terms to fit the borrower’s specific needs. For instance, they may offer longer maturities, delayed interest payments, or flexible repayment schedules.
In short, higher cost. Private debt financing typically comes with higher interest rates and fees compared to bank loans due to the higher risk associated with the flexibility that is required. K2 Capital will make sure that we match your specific requirements and structure with the right debt fund to limit these costs.
Contact us today for a 10 minute loan discussion