AMA’s creativity ability to structure and facilitate debt capital for commercial real estate owners and developers is what differentiates them from its competitors. AMA’s clients get to utilize the long-standing connections and relationships created by AMA over the years. These capital providers including domestic and foreign banks, insurance companies, CMBS lenders, CDO providers, credit companies, pension funds, BDC’s, family offices agencies, REIT’s, private lenders and hedge funds. Through these relationships AMA has been able to arrange a wide array of debt facilities including acquisition financing, permanent financing, interim financing, debt recapitalization, lender financing, note financing, construction financing, renovation financing and forward take-out financing.
This assemblage of capital sources and creativity allows AMA to build a thorough suite of customizable products and structures for clients.
Debt Capital includes the following types of financing:
Construction financing is a short-term loan utilized by borrowers to finance the costs of building an existing building/facility from the ground up. Every loan varies depending on the product type and the amount of time it takes to complete the building process. Most construction loans the borrower is required to provide some level of recourse. AMA has the ability to provide higher leverage and non-recourse construction financing for a higher cost.
Bridge/Renovation financing are all types of flexible short-term financing strategies that may have a challenging and/or complex component to the transaction. AMA’s ability to provide this type of financing enables the borrower with the necessary time frame for the properties to be repositioned and stabilized, at which time a longer-term loan will be provided to pay-off the Bridge/Renovation loan. The duration of these loans typically ranges from six (6) months to five (5) years.
There are two main benefits associated with this bridge/loan strategy.
First, it can allow borrowers to achieve higher leverage. This is because bridge lenders may be willing to underwrite to lower debt-service-coverage ratios (DSCRs) and lend on higher loan to costs(LTC). They do this when they believe that the borrowers’ business plan will increase the revenue from the property and increase the DSCR in future years.
Second, bridge loans often have limited or no prepayment penalties. As such, investors can increase a property’s cash flow quickly to refinance and receive permanent rates on their higher leverage amounts. Had these borrowers gotten permanent financing based on their original cash flows, they would now have to pay a significant prepayment penalty to recapitalize.
Permanent/Fixed Rate Financing
Permanent/Fixed Rate Financing is the core product that is utilized most throughout the commercial real estate industry. Permanent loans usually enjoy the lowest interest rates among the various type of commercial real estate loans. The Borrowers can lock an existing loan from anywhere from 2 years to 30 years based on the property type. Permanent loan programs provide the most sophisticated long-term financing solutions for the middle-market commercial mortgage industry. AMA’s permanent loans provide flexible, long-term financing for stabilized commercial real estate, with a variety of different loan terms. Our relationships are a key component in assisting our client’s permanent financing needs. AMA works with Wall Street, Life Companies, Banks and Fannie Mae/Freddie Mac to supply the most diverse array of permanent solutions for their clients.
Line of Credit
By having AMA assist the Borrower in obtaining a credit facility, this credit facility will enable the Borrower to have quick access to capital for deposits, expenses and to bridge any capital calls/short falls. The financing is secured by a pledge of the borrower’s assets or some other form of creative collateral. AMA’s ability to deliver these types of working capital lines of credit enables a client to have more flexibility and creates more opportunities for them to expand their business.
Forward Commitment Capital
AMA believes that the ability to provide Forward Commitments will continue to gain in popularity since we are in a rising interest rate environment. Most Borrowers who are already committed to an older loan or are 6 months to a year away from completing a project look to this financing to alleviate the future interest rate risk that may occur.
A forward commitment is a written promise from a lender to provide a loan at a future time. The forward is typically a fully underwritten loan commitment with predetermined proceeds, term, interest rate, and loan documents. Forwards are valuable instruments that extend the faith and credit of the lending institution to help borrowers manage financing risk and exposure to variable market conditions. As such, forwards include a premium cost by which the lender can purchase hedging instruments and justify the risk exposure they are required to assume by extending the pledge.
Forward commitments are most frequently used for development projects to secure take-out debt upon project completion. Locking in a loan amount and an interest rate during the construction phase helps the developer reduce the considerable risk exposure involved in any development project.