Types of Commercial Retail Property

• Grocery Anchored Retail
• Other Anchored / Un-Anchored Retail
• Free standing Retail
• Strip Center - Anchored / Un-Anchored
• Mall – Regional or Super Regional
• Outlet Center
• Single Tenant Investment (Credit Tenant Lease)
• Single Tenant Non-Investment
• Specialty Center
• Other Retail
  

Special-Use Commercial Retail Property

• Car Wash
• Golf Course
• Auto Repair
• Dry Cleaners
• Cemeteries
• Church, etc...)

Anchor
Identifies whether the tenant is an anchor tenant. An anchor tenant is a well-known commercial business such as a national chain store, regional department store or Fortune 500 company strategically placed in a shopping center or other commercial building.

Unanchored Retail
A Retail property subtype in which the property is occupied by multiple tenants of which none are anchor tenants and the property is utilized for general retail purposes. An anchor tenant is a well-known commercial retail business such as a national chain store or regional department store strategically placed in a shopping center so as to generate the most amount of customers for all of the stores located in the shopping center.

Grocery Anchor Retail
A Retail property subtype in which the property is occupied by one or more tenants including a grocery anchor tenant and the property is utilized for retail purposes.

Neighborhood Shopping Center  (Building Info.)
Open shopping center of less than 100,000 square feet. Tenants: Provides daily essentials and everyday services

Community Shopping Center  (Building Info.)
Open shopping center of 100,000 - 400,000 square feet. Tenants: Supermarket and/or department or discount store.

Power Shopping Center  (Property Info.)
Open shopping center of 100,000 - 325,000 square feet. Tenants: At least two (usually more) anchor stores.

Regional Shopping Center  (Property Info.)
Enclosed shopping center of 400,000 - 800,000 square feet. Tenants: At least two anchor stores.

Super-Regional Shopping Center  (Building Info.)
Enclosed shopping center of More than 800,000 square feet. Tenants: At least three anchor stores.

Free-Standing Retail
A Retail property subtype in which the property is occupied by one tenant and the property is utilized for retail purposes; fast-food franchises and high-scale retail stores are often free-standing buildings; sometimes called "big-box"; typical gross building area ranges from 2,000 to 100,000 square feet.

Strip Center - Anchored
A Retail property subtype in which the property is occupied by one or more anchor tenants and the main thoroughfares are bordered by an almost continuous row or strip of retail stores and allied service establishments; any shopping area that consists of a row of stores. An anchor tenant is a well-known commercial retail business such as a national chain store or regional department store strategically placed in a shopping center so as to generate the most amount of customers for all of the stores located in the shopping center; typical gross building area ranges from 50,000 to 100,000 square feet.

Strip Center - Unanchored
A Retail property subtype in which the property is occupied by multiple tenants of which none are anchor tenants, and the main thoroughfares are bordered by an almost continuous row or strip of retail stores and allied service establishments; any shopping area that consists of a row of stores. 

Mall - Regional
A Retail property subtype in which the property is an enclosed shopping center with multiple retail tenants which draws from a large trade area of 12 or more miles and is occupied by two or more department stores connected by a group of in-line retail stores; typical gross building area ranges from 400,000 to 1 million square feet.

Mall - Super Regional
A Retail property subtype in which the property is an enclosed shopping center with multiple retail tenants which draws from a large trade area of 12 or more miles and is occupied by four or more anchor tenants; typical gross building area ranges from 750,000 to 2 million square feet and is situated on 85+ acres of land.

Outlet Center
A Retail property subtype in which the property is occupied by multiple outlet-type or discounter tenants grouped together in one setting; these centers may attract bargain shoppers.

Other Anchored Retail
A Retail property subtype in which the property is occupied by one or more tenants including at least one anchor tenant and the property is utilized for retail purposes.

Specialty Center
A Retail property subtype in which the property is occupied by the power center group (e.g. Sports Authority, Levitz Furniture to other "category killer" stores).

Recreational Area  (Property Info.)
An area suited for games, dancing, or other kinds of recreation.

Recreational Property
A property designed for a very specialized use. Property types include sports arenas, country clubs, marinas, etc.

Surrounding Land Use  (Property Info.)
Identifies the surrounding land use in comparison to the collateral property.

Retail Surrounding Land Use
Identifies the general land use of the surrounding and/or adjacent properties in comparison to the collateral property. Retail uses include general retail uses including Grocery Anchored Retail, Other Anchored Retail, Free Standing Retail, Strip Center - Anchored, Strip Center - Unanchored, Mall - Super Regional, Mall - Regional, Regional Center, Unanchored Retail, Single Tenant Investment.

Lower Scale Residential/Retail Surrounding Land Use
Identifies the general land use of the surrounding and/or adjacent properties in comparison to the collateral property. Lower Scale Retail includes retail properties with a lower-scale use as compared to the collateral property (e.g. a neighborhood strip center would be a lower-scale use as compared to a regional mall).

Similar Retail Surrounding Land Use
Identifies the general land use of the surrounding and/or adjacent properties in comparison to the collateral property. Similar Retail includes retail buildings similar to the collateral property.

Higher Scale Residential/Retail Surrounding Land Use
Identifies the general land use of the surrounding and/or adjacent properties in comparison to the collateral property. Higher Scale Retail includes retail properties with a higher-scale use as compared to the collateral property (e.g. a regional mall would be a higher-scale use as compared to a neighborhood strip center).



Retail Tenant Type
Characterizes the tenant type based on usage of the leased area; Retail usage generally includes most uses involving the sale of goods to consumers.

Single Tenant Investment Grade
A Retail property subtype in which the property is net leased to one investment grade tenant (BBB- rating or higher) and the property is utilized for retail purposes.

Single Tenant Non-Investment Grade
A Retail property subtype in which the property is net leased to one non-investment grade tenant (BBB- rating or lower) and the property is utilized for retail purposes.

Below are typical issues and required calculations we address for each type of commercial property.
 

Retail Financing
Best Rates are associated with: Properties with >1.25 DSCR, <75% LTV, <8% vacancy, appropriate TI/LC, Cap Ex reserves; spreads are typically higher for unanchored retail

• LTV up to 90%
• Occupancy down to 80%
• Amortized to 30 years
• Permanent (Purchase and Refinance) loans from $25 Thousand to $1 Billion
• Construction loans from $250 Thousand to $300 Million
• Bridge loans from $200 Thousand to $1 Billion
• Hard Money

Issues:

• High credit, national chains and build to suit properties have been very competitive in the marketplace
  
• Tenant diversification continues to be scrutinized
  
• Non-credit single-tenant properties are under close watch
  
• Spreads are typically lower for properties exhibiting a stabilized Trailing 24-36 Month Net Cash Flow
  
• Net Cash Flow calculations include Replacement Reserves
  
• Lenders may reconcile property value using the Direct Capitalization Approach on NOI and NCF

General Required Calculations: (we do these calculations for you)

Rent Roll illustrating in-place occupancy and Potential Gross Income

Effective Gross Income - Potential Gross Income minus the greater of underwritten or market vacancy

Net Operating Income - EGI minus operating expenses

Net Cash Flow - NOI minus Tenant Improvements & Leasing Commissions and Capital Expenditures

Debt Service Coverage Ratio - NOI divided by Annual Debt Service
Cap Rate - should be applied to the stabilized income stream to estimate direct capitalized value to support loan request

For Definitions of Commercial property types etc... (see Commercial Glossary)

  

Commercial property loan rates are at all time low.

March 01, 2006 - National Average on a $1,000,000 loan amount,
amortized at 25 years.

• Fixed rates are based on a 10-Year fixed rate term.
• Fixed rates reflect conduit lenders and
• Variable rates reflect portfolio lenders.

Retail Financing Permanent Loan Amounts - $25,000 - $1 Billion

• Fixed Rate Retail Property Loans 5.54 - 9.85%
• Variable Rate Loans for Retail Properties 4.81 - 6.25%
  • Cap Rate 7.9% to 10.7%

Colorado Rates remain below, the above National Avg.
See our rate page for all markets effecting rates

Commercial mortgage lenders typically require specific loan level data about a property in order to analyze the underwriting risk, prepare a loan quote, and ultimately fund a loan. Mortgage brokers are a primary source of commercial loan originations today. As a result, lenders' expectations regarding the level of reporting, analysis and overall quality of the origination are increasing.

Unfortunately, there are many brokers who can't obtain financing for commercial properties because they use a residential loan application to submit to lenders
- BIG MISTAKE !

See Example Loan Package Extracts

Unlike Residential financing where the Borrower must qualify for the mortgage product; Commercial financing differs whereby the Property must qualify (not the borrower).

How MTG Brokers Corp. Gets You the Best Rate for Your Commercial Property

Commercial mortgage rates are commonly based on the 10-Year US Treasury yield plus a lender Margin/Spread.
 
The interest Rate Index change is based upon market and trading conditions, while spreads are influenced by loan/property factors - primarily Debt Service Coverage and Loan To Value.
 
Property that demonstrates a high DSCR and low LTV will likely command a lower interest rate.  

MTG addresses DSCR/LTV issues via calculations to analyze reserves, fees and other lender underwriting constraints that can impact a properties Net Cash Flow and therefore, the overall interest rate and loan pricing at the time of your loan origination.
 
This is where others fail to obtain you a lender commitment and why we don’t collect any fees until after an offer is submitted by a lender to you “for your approval”
(Typically, A National, Regional or Colorado Lender You Know and Trust !)
 
 

Commonly Required Property Data and Format

While loan submission requirements may vary among lenders, most lenders request the inclusion of the following core loan data:

• General property and building description
  
• Current rent roll to reflect lease start/end dates, square footage or unit type, contract rent, rent escalations, reimbursement issues, and estimated market rent
  
• Property income and expense worksheet including calculations for net operating income (NOI) using at least two historical years of income and expense
  
• Calculation and support of normalized net cash flow (NCF) including appropriate reserves based on property type (e.g., vacancy & collection Loss, management, capital expenditures, tenant improvement costs, leasing commission costs (TILC)
  
• Reconciliation of direct capitalized value to purchase price
  
• Loan amount constrained by maximum loan to value (LTV) and debt service coverage ratio (DSCR)

For a Retail Commercial Loan (Click Here)
Construction, Purchase, Refinance, Bridge, Hard Money

Or Visit One of These Pages


Office Building Commercial property Loan Rates and Financing Info.
Office Includes: Central Business District (CBD) Office, Suburban Garden Office, Suburban High Rise Office, Medical Office, Other Office, Doctor Office (for patients requiring bed space - Choose Health Care)

Retail Commercial property Loan Rates and Financing Info.
Retail Properties Include: Grocery, Strip Center, Mall, Outlet Center, and Specialty Center (Car Wash, Golf Course, Auto Repair, Dry Cleaners, Cemeteries.....), etc...

Industrial Warehouse Commercial property Loan Rates and Financing Info.
Industrial and Warehouse include: Warehouse with Office, R & D, Manufacturing, Flex Space, etc...

Multifamily Commercial property Loan Rates and Financing Info.
Multi Family: Apartments, Condos, Townhomes, Military and Student Housing, Community Developments, etc...

Lodging, Hotel, Motel Commercial property Loan Rates and Financing Info.
Hotel Include all Lodging, Motel, Economy, Luxury, Resort, Extended Stay, etc...

Mobile Home Parks Commercial property Loan Rates and Financing Info.
Mobile Home Parks: RV and other Pad rental space

Healthcare Commercial property Loan Rates and Financing Info.
Health Care: Nursing Home, Cognitive Care, Assisted Living, Hospitals, etc...

Self Storage Units Commercial property Loan Rates and Financing Info.
Self Storage (Mini-Storage, Climate Controlled / Refrigerated Storage, Yard Storage, Other Storage)

Mixed-Use Commercial property Loan Rates and Financing Info.
Mixed-Use: A combination of usually two of the following: Office, Retail, Hotel, Multifamily, Industrial

Including:
Community Development & Financing
Agricultural Use Property
Rural Area Lending
Land Financing

  
for other available financing options - Please see:

• Hard Money
  
  
• Please Visit Bridge Loans for for the development of new commercial properties, or the renovation and repositioning of existing properties, for both pre-leased and speculative development.
  
  

  For Commercial Mortgage industry...
  see our page on CMBS (Commercial Mortgage Backed Securities)
  2nd mortgages not allowed...we show a way around this
  
  
  see Mezzanine Loans ...for Commercial Mortgage Loan Financing
  How to get a Junior Lien (similar to second mortgage)
  
  

• 1 - 4 Unit Financing (Typical Bank Loan Products for Investors), and 2nd home financing.
   
• Fix-N-Flip for 1-19 unit investment financing
   
• Investment_Specials

  
  
Also see Balloon Mortgage for Variable Rate & Cap Rate.
 
  
  
Please see the Commercial Only Glossary
(see Commercial Glossary)