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Variable Rate Demand Bond Program

Credit Enhancement Programs

Because of the tight credit in today’s Real Estate Lending market ACI has implemented a Credit Enhancement Program with several Insurance and Reinsurance Companies to guaranty ACI or its assigns the repayment of principle and interest on these Loans. This will in most cases make the transaction Investment Grade Paper, and non-recourse. The cost of this service varies on each transaction, but typically ranges from 3% to 5% at the time of closing and the same fee annually. These Insurance Bonds must be kept in place for the entire term of the Loan.

VARIABLE AND FIXED RATE DEMAND BOND PROGRAM

This is our newest program and is the most competitive rate program in the industry today. This Commercial Paper is traded over 30 day LIBOR and a small spread (typically 25 basis points) is added to the 30 day LIBOR. In addition a 1% (100 basis points) Letter of Credit is arranged through our relationship bank(s) and is incorporated into the rate. The total rate today would be in the low to mid 3% range. The Loan product can be used for acquisition, refinance and construction/permanent Loans. All of the transactions are full recourse, but offer the best rate in the industry with no prepayment penalty ever. Typically the terms are 5 years with 20 or 25 year amortization schedules. A standard 1% Loan fee is charged at closing and a standard Good Faith Deposit is collected upon the execution of the formal Term Sheet.

 

 

Term: 3-5 years with two automatic renewals
Amortization: 20/25 years
LTV 70-80%
Rate: 30 day LIBOR plus 175-225. 100 Basis points is the LOC (letter of credit) enhancement.
Pre-payment: None ever
Fees: 50k in Legal/Bond Counsel, rating agency fees, LOC Counsel and Trustee Counsel
Other Third Parties: MAI, Engineering and Environmental estimated at $12,000
Annual Fees: 1% LOC, which is inclusive of the interest rate.

Trustee Bank Fee = $2,500

Rating Maintenance Fee= $2,500

Remarketing Fee: 25 Basis Points, which is inclusive of the interest rate.
Nation Direct Fee: 50 Basis Points, which is inclusive of the interest rate.
Underwriting: The LOC will be underwritten by the LOC division, which will be determined by the strength of the Borrower's credit and financials. The real estate will be underwritten in the standard formula with DSCR requirements and LTV/LTC considerations etc. The Borrower shall guaranty the LOC for the term of the Loan
Borrower Savings: 10M CMBS Loan @ 25 amortization @ 5%, including closing cost = $59,189 monthly. Same Loan on enhancement program = $47,414 monthly.
Product Types Considered: Hotel, Golf Course, Multi-family, Retail, Office, Mall, Mixed Use, Senior Care, Assisted Living. Construction/Perm for all of these products also considered

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Last modified: 01/24/11