COMMERCIAL

Commercial real estate is an income producing property used solely for business (rather than residential) purposes. Examples include retail malls, shopping centers, office buildings and complexes, and hotels.

Commercial Loan Programs

Just as with residential mortgages, banks and independent lenders are actively involved in making loans on commercial real estate.

Financing – including the acquisition, development and construction of these properties – is typically accomplished through commercial real estate loans.

GMG Commercial Loans are all bespoke and our dedicated team of professionals work closely with all parties involved to structure a loan which meets the criteria of the borrower.

Loan Structure

While residential mortgages are typically made to individual borrowers, commercial real estate loans are often made to business entities. These entities are often formed for the specific purpose of owning commercial real estate.

An entity may not have a financial track record or any credit rating, in which case the lender may require the principals or owners of the entity to offer personal guarantees.

This provides the lender with an individual (or group of individuals) with a credit history and from whom they can recover in the event of loan default. If this type of guaranty is not required by the lender, and the property is the only means of recovery in the event of loan default, the debt is called a non-recourse loan meaning that the lender has no recourse against anyone or anything other than the property.

Loan Tenor

Unlike residential loans, the terms of commercial loans typically range from five years (or less) to 20 years, and the amortization period is often longer than the term of the loan.

A lender, for example, might make a commercial loan for a term of seven years with an amortization period of 30 years. In this situation, the investor would make payments for seven years of an amount based on the loan being paid off over 30 years, followed by one final “balloon payment” of the entire remaining balance on the loan.

GMG Commercial Loans are all bespoke and our dedicated team of professionals work closely with all parties involved to structure a loan which meets the criteria of the borrower.

Case Study: Commercial

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