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  August 23, 2005
Pacific Security Capital Newsletter
Commercial Real Estate Consulting Services
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Apartment Loans

Eligible Properties:

Acquisition, Refinance and Repositioning of both garden-style and hi-rise multifamily/condo properties are acceptable. Stabilized properties are defined by the greater of 90% or sustaining occupancy. We will consider non-stabilized properties on a bridge/interim basis.

Eligible Property Locations:

Nationwide. Market areas with a stable current occupancy. Rent concessions will be underwritten cautiously and typically require higher coverage and reserves.

Loan Size:

$1Million - $50 Million; Will also consider larger portfolio transactions with suitable project economics and sponsorship.

Debt Service Coverage:

1.20x for Conduit, Life Company and Pension Plan Programs and 1.25x for Agency Loans. Properties below 1.20x in need of repositioning and/or redevelopment will be considered on an interim basis.

Loan-to-Value Ratio:

First Position: Up to 80% for Fannie Mae DUS, Conduit and Life Company Programs, and up to 90% on FHA insured loan program and interim facilities.

Junior Position: We can move up the leverage curve for properties that can accommodate secondary financing in the form of mezzanine debt or other structured finance options.

Loan Term:

Permanent Loan Terms: 3, 5, 7, 10, 15, 20, 30, and 35years

Construction Loan Terms: PSC is a large balance construction lender only financing transactions with in excess of $20MM with terms of 12 36 months with extensions available.


35 years or less depending on age, quality of construction and market location.


Leases should be at least 6 months at initial occupancy of a tenant. Consider corporate-type, short-term leases at initial occupancy of a tenant. Consider corporate-type, short-term leases providing furniture and/or maid service on a case-case basis.

NOI Calculation:

Strongly prefer to receive three full years of operating history. Underwrite rental revenues based on last three monthly rent rolls and trailing 12-month history with adjustments where appropriate. Other income, if sustained, on trailing twelve months basis. Generally underwrite expenses based on last full fiscal year, plus a 3% inflation factor subject to industry averages.

Vacancy Factor - The greater of 5%, local market average or the actual property for the most recent 12-month period (including all forms of economic rent loss).

Management Fee - The greater of 5% effective gross income, the actual management contract fee rate, or the industry average.

Capital Reserves - Generally ranging from $150 to $250 per unit, based on the final engineering report, physical inspection, tenancy and age of property.

Time Frames:

Term Sheets within 48 hours, Commitments within 30 days of Application, Closing within 60 days of commitment.


Fees and deposits vary depending on the type of financing being requested and the overall strength of the sponsor and the project. In any event, no fees will be due prior to the issuance of a Loan Application.

To view more information on PSC's multifamily programs or to see a case study please click here.

For more information on Apartment Loans from Pacific Security Capital please see our FAQ's, fill out our online application or contact PSC directly.