Remington Capital

In most cases, if your client is looking for 80% LTV on senior debt, you’re going to have a hard time finding them the capital they need. Understanding the capital stack will allow you provide your client with some industry expertise and quite possibly a more feasible capital structure.

Suppose your client has $2 million in senior debt on an apartment complex that represents 50% LTV. Your client is calling you because he needs another $1.2 million to complete upgrades and repairs, but the bank won’t refinance his project up to 80% LTV. You could spend time trying to find a lender who would refinance this project up to 80% LTV, and if you were lucky enough to find someone the interest rates are likely to be higher than the financing currently in place on the project. Perhaps a better suggestion would be to secure mezzanine financing to supplement the existing loan and get the total financing up to 80%.

As compared to financing for residential properties, commercial properties are much more unique and seeking the correct type of financing is more nuanced. This is also one of the reasons that your clients need your expertise to help them get the financing they need.

Tags: mezzanine financing, Remington Capital, structured finance group, Travis Schmidt