• Report: #1130534

Complaint Review: Commercial Real Estate Finance - CRE-Finance TRUSTED BUSINESS | Ripoff Report Verified Safe™ …businesses you can trust. Commercial Real Estate Finance builds lasting relationships with clients by acting as lender, advisor & partner to clients. Commercial Real Estate Finance's top priority is assisting clients in meeting financial goals. For over 10 years Commercial Real Estate Finance LLC assists commercial real estate clients meet investment objectives.

  • Submitted: Thu, March 13, 2014
  • Updated: Tue, March 24, 2015

  • Reported By: Connecticut Developer — Glastonbury Connecticut
CRE-Finance.com
2 Industrial Way West, Suite 202A Eatontown, New Jersey USA

CRE-Finance REVIEW: Customer Satisfaction Commitment: CRE-Finance is dedicated to customer satisfaction. CRE-Finance implemented strategic changes ensuring client success, focusing on finding ways to assist client's search for new opportunities effectively, even in challenging business climate we face today.
*UPDATE: Recognized by Ripoff Report Corporate Advocacy Program as a safe business service. CRE-Finance, LLC pledges to always resolve any issues: feel safe, confident & secure when doing business with CRE-Finance, LLC, recognized by Ripoff Report Verified™ as a safe business service.

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EDitor's UPDATE: Positive rating and recognition has been given to CRE-Finance for its full commitment to quality customer service.

Ripoff Report's discussions with CRE-Finance, LLC have uncovered an ongoing dedication by the company to total client satisfaction. This means that clients can expect that the company will work towards finding a mutually satisfactory resolution to any concerns. CRE-Finance, LLC listens carefully to client concerns and sees them as an opportunity to learn from past mistakes and become more efficient as a company in the services offered and the support for those services.

CRE-Finance's principal and managing member, Mr. Richard Tretsky, has informed us that his personal philosophy is that his clients success are the heart of the business. [continued below]....
..... As a successful businessman, Mr. Tretsky feels it is critical to listen to his clients and respond properly. By always putting his customers first, Mr. Tretsky hopes to maintain CRE-FINANCE, LLC as a successful enterprise both now and for many years to come. Another top executive, CEO Todd Tretsky told us that Mr. Tretsky's personal business philosophy is based on the premise that "strives to add value in service, understanding that a successful business model is based on value-added services, and client care". CRE-FINANCE, LLC's Todd Tretsky says this, "We are one of the top Correspondent Lenders for helping small businesses create and build their own businesses. With us, you'll always receive an honest and straightforward approach to financing that comes from a team who consistently works with affiliates from large and small investors to find the best fit for the financial needs of small businesses all over the country.”

One of the things Ripoff Report learned in the course of its review is that typical customer feedback reads, "CRE-Finance, LLC truly communicate all aspects of the service in a timely and effective manner. We are very pleased with the responsiveness that the employees show us. They are serious about meeting commitments, and deliver on their promises.”

The information provided in this report is based on comments made by Richard Tretsky during an onsite inspection held by a third party verification company with no biases toward World Patent Marketing.
CRE-Finance is Ripoff Report Verified
Ripoff Report Verified™ .. part of Ripoff Report Corporate Advocacy Business Remediation & Customer Satisfaction Program.A program that benefits the consumer, assures them of complete satisfaction and confidence when doing business with a member business..

CRE-Finance LLC is a correspondence commercial mortgage lending company that can also be found under the company name Financial Funding LLC. They provide a wide array loan options for potential clients for all types of commercial loans. One of CRE-Finance LLC's main objectives is dealing with banks, insurance companies, and investment bankers in order to place investor's loans with the right lender.

Most of their leads are developed through their positive reputation. Richard Tretsky went on to explain, "over the past forty years we have built a network of quality mortgage brokers, realtors, builders, and developers." The quality of their reputation has led to financial consultants and accountants referring their services to potential clients. Mr. Tretsky also informed us that they do advertise on both Google and yahoo which has provided leads for their company. It should be noted that none of the leads for CRE-Finance LLC are purchased.

CRE

CUSTOMER CARE & COMPLAINT RESOLUTION FROM CRE-FINANCE

During the onsite interview Mr. Tretsky was asked to describe a situation where a client was not satisfied with the level of service they received. Mr. Tretsky went on to explain that, "usually complaints against our company are in reference to clients believing that their property should be appraised at a higher value. If complaints like this arise CRE-Finance LLC with offer for an appraisal to be conducted by a third party appraiser. This allows for the client to have a firm understanding of their properties worth from an unbiased source. Complaints can also arise when clients are asked to provide documentation necessary to determine whether or not they qualify for a loan. However, once the proper documentation is provided and the loan can be closed the issues are resolved.”

When asked to comment on complaints posted on Ripoff Report's website Mr. Tretsky informed us that some people who inquire services with CRE-Finance LLC believe that they will automatically qualify for a loan, or receive a certain loan amount. However, this is simply not the case, there are several factors that go into determining the qualifications of a loan. With over 40 years of experience and funding over 10,000 loans CRE-Finance LLC understands the many elements that go into applying for a loan, and are glad to go over applications and provide any information to get people funded. They will use all their professional experience to make sure every customer is ultimately satisfied.

When asked what type of changes they have made to honor their commitment to make things right with the customer per the request of Ripoff Report, Mr. Tretsky informed us that they have added additional staff, and spoke of one staff member in particular who has 25 years of experience. This staff member will primarily focus their attention on QUALITY CONTROL.

World Patent Marketing is proud to be a part of Ripoff Reports Corporate Advocacy Business Remediation and Customer Satisfaction Program. They view this as an opportunity to show their dedication to quality customer service through a trustworthy source.

CRE

CRE-FINANCE / STATEMENT FROM THE CEO, TODD TRETSKY

"Whether you’re an individual or a business, chances are you don’t feel warm and fuzzy about commercial mortgages. The term “friendly, local banker” seems to be a sweet little notion left over from the last century—a relic that has lost its meaning. What’s more, securing loans, finding reasonable fees, and simply getting sound financial guidance and personal attention have become major challenges. For many, the entire commercial mortgage experience is discouraging—even intimidating. At CRE Finance, LLC we’re restoring your faith in Correspondents. Designed to be a resource for all your commercial mortgage needs, we focus on relationships first. By getting to know you, we’re able to find solutions that let you meet your goals and fulfill your dreams. Small enough to be nimble—and unencumbered by the layers of bureaucracy that plague large institutions. We’re creative and understanding, plus we have the flexibility to customize solutions and provide commercial financing needs that suits your situation. We respond quickly, so you can move forward with your life and your plans. Don’t mistake “small” for “unsophisticated,” though. Knowing that convenience is important to you, we offer innovative products that are very competitive. What really defines us is our team. Seasoned over 100 years of combined training, and extremely approachable, our executives and staff are also immersed in your loan process with the goal of building relationships and make your corner of the world a better place to live. At CRE Finance, LLC, your “friendly, Commercial Correspondent is here to serve you. So call us today to create the life you want, whether it’s building a business, growing or expanding your business, financing one building or multiple buildings we are here to help.”

“We are one of the top correspondent lenders for helping small businesses create and build their own businesses. With us, you'll always receive an honest and straightforward approach to financing that comes from a team who consistently with affiliates from large and small investors to find the best fit for the financial needs of small businesses all over the country. Please take time to review our site, learn about some of our programs, and meet the people who will work with you during the transaction, understand our history, and receive answers to some of your questions.”

CRE-Finance, LLC's CRE-Finance, LLC's team have expressed that they feel very confident doing their job. CRE-Finance, LLC takes employee satisfaction seriously as well. Employee feedback and surveys reveal comments such as this, "CRE-FINANCE, LLC provides a very positive environment to work. Opportunities for suggestions and improvements are encouraged. Mr. Tretsky is truly concerned about our contribution to the company and providing growth opportunities for us. He takes the time to listen and communicate with employees and customers.”

Ripoff Report was pleased to learn that CRE-Finance, LLC's past and current approach to business is focused on its pledge to total commitment towards client and employee satisfaction.

CRE

WHY CHOOSE CRE-FINANCE

Choosing a Lender, Broker, or Correspondent Lender

"Maybe you've heard of mortgage lenders and mortgage brokers, but you're not sure what the difference is, or why you'd choose one over the other. Let's explore the differences between lenders and brokers, and also explore a third option -- the correspondent lender.

Lenders

Lenders are banks, mortgage banks, or other financial institutions. These institutions lend their own money. They employ loan officers or other representatives to work with customers and underwriters to process the final loan approval. Underwriting may take place right in the lender's local branch, or at a central location.

Lenders fund your mortgage directly.

Brokers

Brokers don't lend money. They shop your loan around to lenders until they find one to fund your loan. They may do some of the paperwork involved with funding the loan, but the ultimate underwriting approval is done by the lender.v Brokers work with lenders to fund your mortgage.

Correspondent Lenders

Correspondent lenders are almost like a hybrid between lenders and brokers. They can fund your mortgage themselves, or they can get your mortgage funded by a traditional lender. However, even when they send your mortgage out of house for funding, they can complete the underwriting process in-house, giving them more control and quicker turnaround than a broker.

Correspondent lenders may fund your mortgage directly, or by working with other lenders.

Which is better; a lender, broker, or correspondent lender?

The best person is the one who offers the most competitive rate, lowest fees, fastest turnaround on paperwork and approval, and lowest likelihood of botching your deal. Beyond that:

Brokers offer the flexibility of being able to shop multiple lenders at once. But once they send the paperwork to the lender for underwriting approval, they have no control over the process.

Lenders may offer quicker turnarounds since they conduct underwriting themselves. This is not always true for loan officers at national banks -- they often send their underwriting out of town to a central office.

Correspondent lenders are an excellent option, as they combine the flexibility of brokers and the processing speed and control of a lender.”

CRE

STATED IMPROVEMENTS FROM CRE-FINANCE

CRE-Finance, LLC recognizes that complaints posted on Ripoff Report (whether true or not) are issues that need to be addressed, not ignored. If handled correctly, complaints can be valuable learning opportunities. With the feedback generated by Ripoff Report's review, Brandefined has made organizational changes allowing its clients and employees a more streamlined approach to problem resolution and a commitment to a great client experience.

In summary, after our review, which included discussions with Mr. Tretsky, Ripoff Report is convinced that CRE-Finance, LLC is committed to quality delivery of services resulting in total client satisfaction.

Read more about why consumers should feel confident when doing business with a member of Ripoff Report's Corporate Advocacy Business Remediation & Customer Satisfaction Program. Yes, it’s a long name for a program that does a lot for both consumers and businesses alike.

Read about Ripoff Report Corporate Advocacy Business Remediation & Customer Satisfaction Program, a program that benefits the consumer, assures them of complete satisfaction and confidence when doing business with a member business. This program works.

As a matter of policy, when a business becomes a member of the Corporate Advocacy Program they agree to allow Ripoff Report to contact every client who filed a complaint so they can make things right with them. In order to confirm that the complaints were resolved, Ripoff Report is copied on all responses so we can insure that the member business did right by their customer.

NOW TO THE ORIGINAL REPORT THAT WAS FILED

CRE-Finance.com Financial Funding LLC; Richard Tretsky; Todd Treksky; Dametria Hardwick Questionable Business Activities Caution Eatontown New Jersey

ABOUT THE RIPOFF REPORT BELOW:

Ripoff Report would like to let readers know that Ripoff Report emailed this customer so the member business could make things right with them. When a business joins the Corporate Advocacy Program, Ripoff Report emails everyone from the past so the member business can make things right with them. Of course, everything within reason. In order to confirm that the complaints were resolved, Ripoff Report is copied on all responses so we can insure that the member business did right by their customer. Sadly, the author of the complaint below was unreasonable and didn’t allow CRE-Finance the opportunity to make things right with them within reason.

STATEMENT FROM CRE-FINANCE:

We strive for customer service and when this posting was brought to our attention, we reached out to client and we were able to resolve the matter in a satisfactory manner. The author of this post had updated his post confirming the acceptable resolution.

----------------------------------------------------

 I cannot say that Financial Funding LLC aka CRE-Finance LLC ("FFLLC") aka AmeriFinancial cheated me.  Then again I never gave them a chance to.

I have been a Connecticut Based Real Estate Developer for 35 years.  I was seeking funding for a larger commercial development and contacted my own  Mortgage Broker who I believe to be reputable ("Reputable Broker").  My Reputable Broker was contacted by FFLLC thru LinkedIn and FFLLC represented themselves to be Wall Street based direct lenders aka conduit lenders aka correspondent lenders looking for larger commerical deals in the Northeast.  Reputable Broker presented FFLLC my project and FFLLC prepared a term sheet offering financing.  Reputable Broker presented FFLLC my 2nd project and FFLLC prepared a term sheet offering financing for the 2nd project.  Reputable Broker presented the term sheets to me.  Neither Reputable Broker or I had started the customary back checking process.

The deal was almost too good to be true.  But then again, I have seen better and worse deals in my 35 years and I had no reason to believe the offer was outside market parameters.  I had an online conference with Richard Tretsky and all seemed well enough.  I had a second online meeting with Richard Tretsky and for some reason I felt uneasy.  Mind you, we had not started to do the usual extensive background checks. 

Tretsky was asking for a $20,000 non-refundable underwriting fee.  So I started checking.  I did not like what I saw:

  • There were five Ripoff Reports concerning this firm.
  • The so called "Wall Street Office" at 30 Broad Street, 14th Floor, New York, NY 10004 appears to be a Virtual Office supplying a address, a Mailbox, and pay as you go services (for as little as $75 per month). 
  • The address listed for AmeriFinancial is The Trump Building, 40 Wall Street, New York, NY 10005.  I have not seen the AmeriFinancial offices, but I wonder if it too is a Virtual Office offered for $69/month in the building.
  • The New Jersey office seems real enough, but I never visited.
  • I checked out their websites cre-finance.com and financialfundingllc.com and ameritrustdeed.com.  The so called references listed on the sites simply did not check out.  For example, I could not find a Don MacNeil of Valley Stream NY or any of the other names listed on the website using google or any database. 
  • I had never heard of (and googled some) of the designations claimed by Richard Treksky.
  • The numerous press reports about the firms seem to originate from the numerous press releases issued by the firm.
  • They announced Financial Funding LLC acquired AmeriFinancial in a big press release.  However, I could not find anything printed about AmeriFinancial prior to the announcement. 

So I could not say Treksky et al were not legit, but we certainly had a cloud of doubt.  So we asked in writing for Richard Treksky to produce references from his banks, references from people who have successfully borrowed from him in the past and a list of recent loans (tombstones) place in the past year. 

We had no reply. 

 

 

 


This report was posted on Ripoff Report on 03/13/2014 02:10 PM and is a permanent record located here: http://www.ripoffreport.com/r/CRE-Financecom/Eatontown-New-Jersey-07724/CRE-Financecom-Financial-Funding-LLC-Richard-Tretsky-Todd-Treksky-Dametria-Hardwick-Q-1130534. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

Ripoff Report has an exclusive license to this report. It may not be copied without the written permission of Ripoff Report.

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REBUTTALS & REPLIES:
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Updates & Rebuttals

#1 Author of original report

Update

AUTHOR: Connecticut Developer - ()

 

I filed a report against CRE-Financial LLC, aka Financial Funding LLC; and named AmeriFinancial, Richard Tretsky, Todd Tretsky and Dametria Hardwick.   Since the time that I filed the report, the firm has responded to my complaint in a satisfactory manner.   I have requested the support desk of RipOff report to removed my original posting.

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#2 REBUTTAL Owner of company

In response to the complaint from Connecticut Developer, Glastonbury, CT

AUTHOR: Financial Funding LLC - ()

The loan request for the construction project in Glastonbury CT, known as The Shoppes at Avalon was presented to the company by the "reputable broker (Steve Lazar)" as a single construction deal. The "reputable broker" Steve Lazar of Bridwell Sargent, LLC, presented over 400 pages to the credit analyst to review and was himself unsure of the type of financing in total the borrower was looking for.  The owner of the Bridwell Sargent, LLC (Peter Sargent) was at no time and in no way involved in this loan request.  The initial offering was reviewed and an offer presented to Steve Lazar by way of a traditional Letter of Intent for the financing of a retail center only.

At that time, an initial conference call with John Sakon, Steve Lazar and Rich Tretsky took place at which time the borrower informed management of the deal he was looking for, which was financing for the retail shops and the hotel construction, and requested a Term Sheet instead of a Letter of Intent.  John Sakon advised Mr. Tretsky that this deal would be done with only him and no other sponsors as he had already obtained a grant from the hotel franchise.  Yet, The Shoppes at Avalon website details that they were in talks for joint venture REIT financing back in 2006, yet financing has not yet been secured.  Anyone knowledgeable regarding the construction financing in the commercial world, knows how difficult it is to ascertain.  Which will explain why Sakon Development, LLC and John Sakon has been seeking financing for this property since 2006.

Also, a reputable broker would know that a $20,000 underwriting fee for a $43.5 million loan in three phases is extremely inexpensive.  John Sakon stated on the conference call with Rich Tretsky that he thought the fee was extremely reasonable and he preferred to pay the valuation costs at the time they arise.  Also, he preferred having CRE Finance do the leg work securing conduit financing for him instead of him doing it himself as he knows how difficult it is and the fees are easily three times what we were charging and financing was not guaranteed with the "big Wall Street firms".  

The very "reputable broker", Steve Lazar, was told prior to each conference call to bring all questions to the table at each call so the borrower got a level of comfort with the deal.  At no time were references requested and if they were, there are plenty to offer.  We want to demonstrate over $47 million in transactions and in the next week or so, we will have more to announce.

If the borrower had reservations regarding our offices, it would have been very simple to take a drive to our offices in New York or New Jersey from Glastonbury, CT.  The trip to our New York office would have taken a mere hour and forty five minutes; to our New Jersey offices would have taken two hours and forty five minutes.  That is not an extensive drive to ease your mind regarding financing with which you are in need of, prior to sending any funds to the company.

Needless to say, no deal ever materialized from the Letter of Intent and Term Sheet issued for this deal.  That does not negate that the loan offerings were read, conference calls were had and the broker and the sponsor had direct contact with upper management.  Because they did not feel this deal was right for them, they did not execute.  That does not constitute a ripoff.  It is best the relationship ended where it did.

 

_____________________________________________________________________________________

 

Greystone Servicing Corporation, Inc.

 

To:      Todd Tretsky

           Financial Funding LLC

From:    Greystone Funding Corporation

Date:    September 18, 2012

RE:       Georgetown Apartments Term Sheet

 

Greystone Servicing Corporation, Inc. ("Greystone") is pleased to submit the following loan term sheet in regard to the project referenced above based on the information you have supplied to us.  The basic terms are described below and would be under the Fannie Mae Delegated Underwriting and Servicing ("DUS") Program.  This term sheet is based on the information provided to us and the current rates as of the date indicated above.  It should be noted that approval of this loan by the Greystone committee could be subject to obtaining certain waivers from Fannie Mae.

Terms:

Loan Amount:             $2,137,500

Loan Term:                10-Year Term

Amortization:              30 Years

Prepayment Terms:      9.5 years YM, then 3 months pre-pay at 1%, and last 90 days open to prepay at par

Rate Determination*:   Currently estimated at 4.27%

Estimated Spread*:     248 bps over the 10-Year Treasury

Max LTV/Min DSC:       75%/1.25x, as determined in underwriting

Loan Purpose:             Acquisition

Recourse:                   Non-Recourse

*Spread and rate change daily until locked.

 

Application Fee and Third Party Reports

The application fee is $8500 and is nonrefundable.  The fee is an estimate of Greystone's actual cost of processing the application, which includes the costs of an appraisal, a Phase I environmental study, an engineering report, travel expenses, credit reports, processing fees and any other third party expenses that may be incurred.  Lender incurred costs above the application fee will be collected at closing from the Borrower.

Loan Fees

Lender Legal Fees:     Included in the application fee

Origination Fee:         1.0% of the loan amount due at closing

Good Faith Deposit:    1% of the loan amount due at rate lock, refunded post closing

_____________________________________________________________________________________

 

CITIGROUP GLOBAL MARKETS REALTY CORP.

Summary of Terms and Conditions

 

This Summary of Terms and Conditions outlines certain of the terms and conditions relating to the request for the extension of a loan financing with respect to the Property (the "Loan").  These terms and conditions are subject to modification or adjustment as determined by Lender and are only a summary of the terms and conditions which shall be more fully set forth in the documents and/or instruments to be executed in connection with the Loan (collectively, the "Loan Documents").  In the event the Loan is funded, the terms and conditions contained herein shall be superseded by the Loan Documents, and the Loan Documents shall govern the terms and conditions of the Loan without reference to this Term Sheet.

 

Borrower:

The borrower(s) under the Loan (whether one or more, collectively and individually (as the context may require), the “Borrower”) shall each be (i) newly formed or recycled single-purpose, bankruptcy remote entities, (ii) formed exclusively for the purpose of owning and operating the  Property  or  Properties, (iii)  satisfactory to Lender in all respects, and (iv) comply with all applicable rating agency criteria.

 

Sponsor:

Xxxxx

 

Property:

a xx,xxx sq. foot single tenant Walgreens retail building in Columbus GA, commonly known as Walgreens

 

Loan Amount:

An amount not to exceed $2,950,000

Purpose of Financing:

The  Loan  proceeds  will  be  used  by  Borrower  to  refinance  any  existing mortgage and mezzanine indebtedness secured directly or indirectly by the Property.

 

Interest Rate:

The interest rate shall be fixed at a per annum rate equal to the greater of (a) the sum of (i) 290 basis points plus (ii) the value of the 10 year  “on the run” U.S. Treasury rate, rounded up to the nearest 1/8th of 1%; (b) the sum of (i) 290 basis points plus (ii) the value of the 10 year “offer-side” swap rate (as determined by Lender) rounded up to the nearest 1/8th of 1%; and (c) 4.69%.  Interest shall accrue based on a 360-day year and the actual number of days elapsed.  Lender reserves all rights to adjust the spread applicable to the Loan at any time prior to closing.

 

Minimum DSCR:

As of the closing date, pursuant to the final Interest Rate and based upon underwritten net cash flow, each as determined by Lender, a minimum debt service coverage ratio (“DSCR”) of 1.30 to 1.00 at the greater of the actual debt service constant and 9.30%.

 

Minimum Debt Yield:

12% debt yield (“DY”) based upon underwritten net cash flow as determined by Lender.

 

Maximum LTV:

Loan to value ratio (“LTV”) not to exceed 57.5% based upon a FIRREA appraisal acceptable to Lender.

 

Term:

10 years

 

Amortization Term:

Fifteen (15) years

 

Collateral:

The Loan will be secured by a first mortgage or deed of trust on Borrower’s fee and/or leasehold interests in the Property; personal property (tangible and intangible) and fixtures; applicable reserves; a collateral assignment of all operating licenses, leases, management agreements, and all other agreements, each relating to the Property.  If the Property (or any portion thereof and/or interest therein) is held by virtue of a leasehold interest, the applicable lease must contain finance ability provisions satisfactory to Lender and the rating agencies and a satisfactory estoppel and agreement from the fee owner and each other applicable party must be provided.  Lender shall have the right to require that (i) each Property be owned by a separate Borrower, (ii) one or more of the liens on the Properties be cross-defaulted and cross-collateralized and (iii) any one or more of such “crossed” liens be “uncrossed” in connection with any Secondary Market Transaction (defined below) or otherwise.

 

Recourse:

Except for “bad boy” acts specified in the Loan Documents, the Loan shall be nonrecourse for which personal liability of Borrower and Sponsor shall be limited  to  the  collateral  for  the  Loan.     Sponsor  or  another  individual acceptable to Lender shall execute a recourse carve out guaranty with respect to the aforesaid “bad boy” acts.  Additionally, each of Borrower and Sponsor shall enter into an environmental indemnity agreement in favor of Lender.

 

Fees / Deposits:            

The following fees and deposits shall be payable by Applicant in connection herewith:

 

(i)      a $xx,xxx Application Fee, payable upon execution hereof.

 

(ii)    a $xx,xxx Good Faith Deposit, payable upon execution hereof and to be used to cover Lender’s out of pocket expenses incurred in connection herewith.

 

(iii)      if a commitment is requested by Borrower, a Commitment Deposit equal  to  1%  of  the  principal  amount  of  the  Loan,  to  be  paid  upon  the execution by Lender of a commitment letter (if issued) and to be used to cover Lender’s   out   of   pocket   expenses   incurred   in   connection   with   said commitment.

 

Each of Applicant, Borrower and Sponsor (each, a “Loan Party” and, collectively,  the  “Loan  Parties”)  shall  be  responsible  for  all  expenses incurred  by  Lender  in  connection  herewith  and  in  connection  with  the issuance of a commitment letter (if applicable), the closing of the Loan and the  collection  of  amounts  owed  pursuant  to  this  Term  Sheet  (including, without limitation, attorneys’ fees), regardless of whether or not the same are covered by the Good Faith Deposit or whether or not the Loan closes.  The Application Fee shall be non-refundable and shall be deemed fully earned by Lender upon receipt.  At closing, Lender shall refund to Borrower any portion of the Good Faith Deposit and Commitment Deposit (collectively, the “Deposits”) remaining after payment of all of Lender’s out of pocket costs. The unapplied portions of any Deposits may be retained by Lender in the event that the Loan fails to close due to any Loan Party’s (i) bad faith actions in connection therewith and/or (ii) failure to comply in a timely manner and/or breach of this Term Sheet and/or any commitment letter issued in connection herewith. The Loan Parties understand that the Deposits may not be sufficient to pay all of Lender’s expenses. Lender may require additional deposits to the Deposits from time to time if deemed necessary by Lender to be applied toward the payment of its expenses in connection herewith and in connection with the closing of the Loan, and Sponsor shall promptly pay such deposits to Lender upon demand from time to time.

 

Outside Closing Date:              

October 312012.  If the Loan is not funded and closed on or prior to the Outside Closing Date, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated. Additionally,  in  the  event  any  party  (other  than  Lender)  fails  to comply with or breaches any term or provision hereof, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated.

 

Closing Requirements:

Approval of the Loan will be subject to satisfactory completion of Lender’s underwriting and due diligence, including review and approval of all information that Lender deems pertinent in its sole discretion.  Upon acceptance of this Term Sheet, Lender shall provide Borrower with its underwriting and legal closing checklists, the terms of which must be satisfied prior to closing.   Sponsor and Borrower shall cooperate with Lender in satisfying the foregoing, including, without limitation, by granting Lender and its designees full access (subject to the rights of tenants) to all portions of the Property for inspection and testing purposes, including, but not limited to, Phase I and Phase II environmental inspections.

 

Broker:

The Loan Parties agree to pay any and all fees imposed or charged by all brokers, mortgage bankers and advisors (each a “Broker”) hired or contracted by any Loan Party or their affiliates who brought about the issuance of this Term Sheet or the consideration of the Loan, and agree to indemnify and hold Lender harmless from and against any and all claims, demands and liabilities for brokerage commissions, assignment fees, finder’s fees or other compensation whatsoever arising from this Term Sheet or Lender’s extending the Loan which may be asserted against Lender by any person.   The foregoing indemnity shall survive any termination hereof and the closing of the Loan.   The Loan Parties hereby represent and warrant that the only Broker engaged by the Loan Parties with respect hereto is Financial Funding, LLC. Lender hereby agrees to pay any and all fees imposed or charged by all Brokers hired solely by Lender.  The Loan Parties acknowledge (a) that any Broker is not an agent of Lender and has no power or authority to bind Lender, (b) agrees that Lender is not responsible for any recommendations or advice given to any Loan Party by any Broker, (c) that Lender and the Loan Parties are dealing at arms’-length with each other in  a  commercial lending transaction, (d)  that  no  fiduciary or  other special relationship exists or shall exist between Lender and the Loan Parties and (e) that none of the Loan Parties shall be entitled to rely on any assurances or waiver given, or statements made or actions taken, by any Broker which purport to bind Lender or modify or otherwise affect this Term Sheet or the Loan, unless Lender has, in its sole discretion agreed in writing with the Loan Parties to such assurances, waivers, statements, actions or modifications.  The Loan Parties acknowledge and agree that Lender may, in its sole discretion, pay fees or compensation to any Broker in connection with or arising out of the closing and funding of the Loan.  Such fees and compensation, if any, (i) shall be in addition to any fees which may be paid by any Loan Party to such Broker and (ii) create a potential conflict of interest for Broker in its relationship with the Loan Parties.  Such fees and compensation, if applicable, may include a direct, one-time payment, servicing fees and/or incentive payments based on volume and size of financings involving Lender and such Broker.

 

 

 

_____________________________________________________________________________________

 

Summary of Certain Indicative Terms

April 10, 2013

 

Collateral:                    

(i) xxxxx Casa Grande, a 77 key hotel located at xxxxxx,  Casa Grande, AZ and (ii)  xxxxxxx Casa Grande, a 42 key hotel located at xxxxxx  Casa Grande AZ.

Borrower: 

To be a newly formed or recycled single-purpose limited liability company or limited partnership acceptable to Lender.

Key Principal:

Individual(s) or entity(ies) acceptable to Lender, with net worth and liquidity requirements to be determined by Lender during diligence and underwriting.

Loan Amount:

$7,400,000 (in aggregate).

Loan Term:

10 Years.

Amortization:

25 years.

Maximum Closing Loan-to-Value:

65%.

Minimum Closing Debt Service Coverage:

1.50x based on Lender's underwritten net cash flow.

Minimum Closing Debt Yield:

11.50% based on Lender's underwritten net cash flow.

Minimum Underwritten NCF:

$870,000.

Interest Rate:

The greater of (i) the sum of (a) the 10-year swap rate and (b) 295 basis points and (ii) 4.90%, with interest payable monthly in arrears, calculated on an actual / 360 basis.

Expense Deposit:

$xx,xxx in the aggregate.

Recourse:

Non-recourse to Key Principals except for customary bad-boy carve-outs.

 

This Summary of Certain Indicative Terms has been prepared for the sole purpose of discussing an opportunity to make a loan and to set forth certain terms on which such transaction would be conditioned. This is not a commitment by Ladder Capital to provide financing to any party in any amount, whether described herein or otherwise. Neither party hereto will have any obligation to the other party with respect to the proposed transaction until execution of definitive and binding financing documentation between the parties in a form acceptable to each of the parties. Notwithstanding anything else contained herein, the closing of the proposed transaction is expressly subject to the approval of Ladder Capital investment committee.

 

 __________________________________________________________________________________________

 

CITIGROUP GLOBAL MARKETS REALTY CORP.

Summary of Terms and Conditions

 

This Summary of Terms and Conditions outlines certain of the terms and conditions relating to the request for the extension of a loan financing with respect to the Property (the "Loan").  These terms and conditions are subject to modification or adjustment as determined by Lender and are only a summary of the terms and conditions which shall be more fully set forth in the documents and/or instruments to be executed in connection with the Loan (collectively, the "Loan Documents").  In the event the Loan is funded, the terms and conditions contained herein shall be superseded by the Loan Documents, and the Loan Documents shall govern the terms and conditions of the Loan without reference to this Term Sheet.

 

Borrower:

The borrower(s) under the Loan (whether one or more, collectively and individually (as the context may require), the “Borrower”) shall each be (i) newly formed or recycled single-purpose, bankruptcy remote entities, (ii) formed exclusively for the purpose of owning and operating the  Property  or  Properties, (iii)  satisfactory to Lender in all respects, and (iv) comply with all applicable rating agency criteria.

 

Sponsor:

Xxxxx

 

Property:

a xx,xxx sq. foot single tenant Walgreens retail building in Albany GA, commonly known as Walgreens

 

Loan Amount:

An amount not to exceed $2,975,000.

Purpose of Financing:

The  Loan  proceeds  will  be  used  by  Borrower  to  refinance  any  existing mortgage and mezzanine indebtedness secured directly or indirectly by the Property.

 

Interest Rate:

The interest rate shall be fixed at a per annum rate equal to the greater of (a) the sum of (i) 290 basis points plus (ii) the value of the 10 year  “on the run” U.S. Treasury rate, rounded up to the nearest 1/8th of 1%; (b) the sum of (i) 290 basis points plus (ii) the value of the 10 year “offer-side” swap rate (as determined by Lender) rounded up to the nearest 1/8th of 1%; and (c) 4.69%.  Interest shall accrue based on a 360-day year and the actual number of days elapsed.  Lender reserves all rights to adjust the spread applicable to the Loan at any time prior to closing.

 

Minimum DSCR:

As of the closing date, pursuant to the final Interest Rate and based upon underwritten net cash flow, each as determined by Lender, a minimum debt service coverage ratio (“DSCR”) of 1.30 to 1.00 at the greater of the actual debt service constant and 9.30%.

 

Minimum Debt Yield:

12% debt yield (“DY”) based upon underwritten net cash flow as determined by Lender.

 

Maximum LTV:

Loan to value ratio (“LTV”) not to exceed 57.5% based upon a FIRREA appraisal acceptable to Lender.

 

Term:

10 years

 

Amortization Term:

Fifteen (15) years

 

Collateral:

The Loan will be secured by a first mortgage or deed of trust on Borrower’s fee and/or leasehold interests in the Property; personal property (tangible and intangible) and fixtures; applicable reserves; a collateral assignment of all operating licenses, leases, management agreements, and all other agreements, each relating to the Property.  If the Property (or any portion thereof and/or interest therein) is held by virtue of a leasehold interest, the applicable lease must contain finance ability provisions satisfactory to Lender and the rating agencies and a satisfactory estoppel and agreement from the fee owner and each other applicable party must be provided.  Lender shall have the right to require that (i) each Property be owned by a separate Borrower, (ii) one or more of the liens on the Properties be cross-defaulted and cross-collateralized and (iii) any one or more of such “crossed” liens be “uncrossed” in connection with any Secondary Market Transaction (defined below) or otherwise.

 

Recourse:

Except for “bad boy” acts specified in the Loan Documents, the Loan shall be nonrecourse for which personal liability of Borrower and Sponsor shall be limited  to  the  collateral  for  the  Loan.     Sponsor  or  another  individual acceptable to Lender shall execute a recourse carve out guaranty with respect to the aforesaid “bad boy” acts.  Additionally, each of Borrower and Sponsor shall enter into an environmental indemnity agreement in favor of Lender.

 

Fees / Deposits:            

The following fees and deposits shall be payable by Applicant in connection herewith:

 (i)      a $xx,xxx Application Fee, payable upon execution hereof.

 (ii)    a $xx,xxx Good Faith Deposit, payable upon execution hereof and to be used to cover Lender’s out of pocket expenses incurred in connection herewith.

 (iii)      if a commitment is requested by Borrower, a Commitment Deposit equal  to  1%  of  the  principal  amount  of  the  Loan,  to  be  paid  upon  the execution by Lender of a commitment letter (if issued) and to be used to cover Lender’s   out   of   pocket   expenses   incurred   in   connection   with   said commitment.

 Each of Applicant, Borrower and Sponsor (each, a “Loan Party” and, collectively,  the  “Loan  Parties”)  shall  be  responsible  for  all  expenses incurred  by  Lender  in  connection  herewith  and  in  connection  with  the issuance of a commitment letter (if applicable), the closing of the Loan and the  collection  of  amounts  owed  pursuant  to  this  Term  Sheet  (including, without limitation, attorneys’ fees), regardless of whether or not the same are covered by the Good Faith Deposit or whether or not the Loan closes.  The Application Fee shall be non-refundable and shall be deemed fully earned by Lender upon receipt.  At closing, Lender shall refund to Borrower any portion of the Good Faith Deposit and Commitment Deposit (collectively, the “Deposits”) remaining after payment of all of Lender’s out of pocket costs. The unapplied portions of any Deposits may be retained by Lender in the event that the Loan fails to close due to any Loan Party’s (i) bad faith actions in connection therewith and/or (ii) failure to comply in a timely manner and/or breach of this Term Sheet and/or any commitment letter issued in connection herewith. The Loan Parties understand that the Deposits may not be sufficient to pay all of Lender’s expenses. Lender may require additional deposits to the Deposits from time to time if deemed necessary by Lender to be applied toward the payment of its expenses in connection herewith and in connection with the closing of the Loan, and Sponsor shall promptly pay such deposits to Lender upon demand from time to time.

 

Outside Closing Date:              

October 312012.  If the Loan is not funded and closed on or prior to the Outside Closing Date, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated. Additionally,  in  the  event  any  party  (other  than  Lender)  fails  to comply with or breaches any term or provision hereof, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated.

 

Closing Requirements:

Approval of the Loan will be subject to satisfactory completion of Lender’s underwriting and due diligence, including review and approval of all information that Lender deems pertinent in its sole discretion.  Upon acceptance of this Term Sheet, Lender shall provide Borrower with its underwriting and legal closing checklists, the terms of which must be satisfied prior to closing.   Sponsor and Borrower shall cooperate with Lender in satisfying the foregoing, including, without limitation, by granting Lender and its designees full access (subject to the rights of tenants) to all portions of the Property for inspection and testing purposes, including, but not limited to, Phase I and Phase II environmental inspections.

 

Broker:

The Loan Parties agree to pay any and all fees imposed or charged by all brokers, mortgage bankers and advisors (each a “Broker”) hired or contracted by any Loan Party or their affiliates who brought about the issuance of this Term Sheet or the consideration of the Loan, and agree to indemnify and hold Lender harmless from and against any and all claims, demands and liabilities for brokerage commissions, assignment fees, finder’s fees or other compensation whatsoever arising from this Term Sheet or Lender’s extending the Loan which may be asserted against Lender by any person.   The foregoing indemnity shall survive any termination hereof and the closing of the Loan.   The Loan Parties hereby represent and warrant that the only Broker engaged by the Loan Parties with respect hereto is Financial Funding, LLC. Lender hereby agrees to pay any and all fees imposed or charged by all Brokers hired solely by Lender.  The Loan Parties acknowledge (a) that any Broker is not an agent of Lender and has no power or authority to bind Lender, (b) agrees that Lender is not responsible for any recommendations or advice given to any Loan Party by any Broker, (c) that Lender and the Loan Parties are dealing at arms’-length with each other in  a  commercial lending transaction, (d)  that  no  fiduciary or  other special relationship exists or shall exist between Lender and the Loan Parties and (e) that none of the Loan Parties shall be entitled to rely on any assurances or waiver given, or statements made or actions taken, by any Broker which purport to bind Lender or modify or otherwise affect this Term Sheet or the Loan, unless Lender has, in its sole discretion agreed in writing with the Loan Parties to such assurances, waivers, statements, actions or modifications.  The Loan Parties acknowledge and agree that Lender may, in its sole discretion, pay fees or compensation to any Broker in connection with or arising out of the closing and funding of the Loan.  Such fees and compensation, if any, (i) shall be in addition to any fees which may be paid by any Loan Party to such Broker and (ii) create a potential conflict of interest for Broker in its relationship with the Loan Parties.  Such fees and compensation, if applicable, may include a direct, one-time payment, servicing fees and/or incentive payments based on volume and size of financings involving Lender and such Broker.

 

 

 

_____________________________________________________________________________________

 

TERM SHEET

July 15, 2013

 

This Term Sheet, together with the Cover Letter dated July 15, 2013 forms the Application for the Loan to Borrower (as defined below) to be considered by Lender.  All capitalized terms used and not otherwise defined in this Term Sheet shall have the meanings given to such terms in the Cover Letter.

Property Address:               XXXXX, CA 93454.

Property Type:                     Retail.

Interest of Borrower:       Leasehold.

Purpose of Financing:         Refinancing.

Lender:                                 Ladder Capital Finance LLC (or an affiliate thereof), and its successors and/or assigns.

Borrower:                          To be a newly formed or recycled single-purpose limited liability company or limited partnership acceptable to Lender, with two independent directors.

Key Principal:                 Individual(s)  or  entity(ies)  acceptable  to  Lender,  with  net  worth  and liquidity requirements to be determined by Lender during diligence and underwriting.

 

Loan Amount:                      Up to $6,100,000, subject to the terms and conditions set forth in this Application.

 

Limitations on Loan Amount:                     On the date of Closing, the Loan shall have: (i) a loan-to-value ratio (the “LTVR”) of no greater than 70% and (ii) (a) a  minimum debt service coverage ratio (“DSCR”) of 1.30x, based on the greater of the actual debt service constant and 6.934% (representing the constant on the date of this Application) and (b) a minimum debt yield of 8.9%, in each case using Lender’s underwritten net cash flow.

 

Collateral:                          Lender shall have a first priority lien on Borrower’s leasehold interest in the Property, including a first priority assignment of all leases, rents, issues and profits and a first priority and perfected security interest in all personal property, licenses, permits, contract rights, general intangibles and other assets of Borrower used in connection with the operation, maintenance and management of the Property, to be evidenced and secured by Lender’s standard loan documents (the “Loan Documents”).

 

Maturity Date:                     10 years after the first payment date after the Closing.

 

Interest Rate:                       A fixed rate to be determined as follows:

The greater of (i) the sum of (a) the 10-year offered side swap rate and (b)

285 basis points and (ii) 5.60%, with interest payable monthly in arrears, calculated on an actual/360 basis.

Rate Lock:                            Borrower shall have the option of entering into Lender’s standard form rate lock agreement with Lender prior to Closing.  The rate lock agreement shall be accompanied by a non-refundable rate lock deposit equal to 2% of the amount being locked.

 

Amortization:                       Thirty (30) year schedule.

 

Closing:                              The closing of the Loan shall occur no earlier than the first business day after Applicant and/or Borrower have satisfied all of Lender’s requirements, including the Closing Conditions and any other terms and conditions set forth in this Application.

 

Correspondent:                  Borrower shall (i) represent to Lender the identity of all finders or correspondents engaged by Borrower in connection with the Loan, initially represented to  be  solely  Financial Funding,  LLC,  (ii)  pay  any  and  all commissions and other similar fees owing in connection with the parties identified in (i) other than as set forth in the broker disclosure letter referenced  in  the  following  paragraph,  and  (iii)  indemnify  and  defend Lender from and against all costs and expenses incurred by Lender as a result of a breach of the foregoing or otherwise in connection with any claim for a brokerage commission or fee made against Lender with respect to the Loan.

 

Confidentiality:                  This Application is being delivered with the understanding that neither it nor the substance thereof shall be disclosed by Borrower or any Key Principal or any of their respective affiliates to any third person, except those who are in confidential relationships to any of them (i.e., Borrower’s counsel, accountants and other retained business advisors) or as may be required by law.

_____________________________________________________________________________________

 

CITIGROUP GLOBAL MARKETS REALTY CORP.

Summary of Terms and Conditions

 

This Summary of Terms and Conditions outlines certain of the terms and conditions relating to the request for the extension of a loan financing with respect to the Property (the "Loan").  These terms and conditions are subject to modification or adjustment as determined by Lender and are only a summary of the terms and conditions which shall be more fully set forth in the documents and/or instruments to be executed in connection with the Loan (collectively, the "Loan Documents").  In the event the Loan is funded, the terms and conditions contained herein shall be superseded by the Loan Documents, and the Loan Documents shall govern the terms and conditions of the Loan without reference to this Term Sheet.

 

Borrower:

The borrower(s) under the Loan (whether one or more, collectively and individually (as the context may require), the “Borrower”) shall each be (i) newly formed or recycled single-purpose, bankruptcy remote entities, (ii) formed exclusively for the purpose of owning and operating the  Property  or  Properties, (iii)  satisfactory to Lender in all respects, and (iv) comply with all applicable rating agency criteria.

 

Sponsor:

Xxxxx

 

Property:

a 16,000 sq. foot single tenant Walgreens retail building in Columbus GA, commonly known as Walgreens

 

Loan Amount:

An amount not to exceed $3,000,000.

Purpose of Financing:

The  Loan  proceeds  will  be  used  by  Borrower  to  refinance  any  existing mortgage and mezzanine indebtedness secured directly or indirectly by the Property.

 

Interest Rate:

The interest rate shall be fixed at a per annum rate equal to the greater of (a) the sum of (i) 290 basis points plus (ii) the value of the 10 year  “on the run” U.S. Treasury rate, rounded up to the nearest 1/8th of 1%; (b) the sum of (i) 290 basis points plus (ii) the value of the 10 year “offer-side” swap rate (as determined by Lender) rounded up to the nearest 1/8th of 1%; and (c) 4.69%.  Interest shall accrue based on a 360-day year and the actual number of days elapsed.  Lender reserves all rights to adjust the spread applicable to the Loan at any time prior to closing.

 

Minimum DSCR:

As of the closing date, pursuant to the final Interest Rate and based upon underwritten net cash flow, each as determined by Lender, a minimum debt service coverage ratio (“DSCR”) of 1.30 to 1.00 at the greater of the actual debt service constant and 9.30%.

 

Minimum Debt Yield:

12% debt yield (“DY”) based upon underwritten net cash flow as determined by Lender.

 

Maximum LTV:

Loan to value ratio (“LTV”) not to exceed 57.5% based upon a FIRREA appraisal acceptable to Lender.

 

Term:

10 years

 

Amortization Term:

Fifteen (15) years

 

Collateral:

The Loan will be secured by a first mortgage or deed of trust on Borrower’s fee and/or leasehold interests in the Property; personal property (tangible and intangible) and fixtures; applicable reserves; a collateral assignment of all operating licenses, leases, management agreements, and all other agreements, each relating to the Property.  If the Property (or any portion thereof and/or interest therein) is held by virtue of a leasehold interest, the applicable lease must contain finance ability provisions satisfactory to Lender and the rating agencies and a satisfactory estoppel and agreement from the fee owner and each other applicable party must be provided.  Lender shall have the right to require that (i) each Property be owned by a separate Borrower, (ii) one or more of the liens on the Properties be cross-defaulted and cross-collateralized and (iii) any one or more of such “crossed” liens be “uncrossed” in connection with any Secondary Market Transaction (defined below) or otherwise.

 

Recourse:

Except for “bad boy” acts specified in the Loan Documents, the Loan shall be nonrecourse for which personal liability of Borrower and Sponsor shall be limited  to  the  collateral  for  the  Loan.     Sponsor  or  another  individual acceptable to Lender shall execute a recourse carve out guaranty with respect to the aforesaid “bad boy” acts.  Additionally, each of Borrower and Sponsor shall enter into an environmental indemnity agreement in favor of Lender.

 

Fees / Deposits:            

The following fees and deposits shall be payable by Applicant in connection herewith:

 (i)      a $xx,xxx Application Fee, payable upon execution hereof.

 (ii)    a $xx,xxx Good Faith Deposit, payable upon execution hereof and to be used to cover Lender’s out of pocket expenses incurred in connection herewith.

 (iii)      if a commitment is requested by Borrower, a Commitment Deposit equal  to  1%  of  the  principal  amount  of  the  Loan,  to  be  paid  upon  the execution by Lender of a commitment letter (if issued) and to be used to cover Lender’s   out   of   pocket   expenses   incurred   in   connection   with   said commitment.

 Each of Applicant, Borrower and Sponsor (each, a “Loan Party” and, collectively,  the  “Loan  Parties”)  shall  be  responsible  for  all  expenses incurred  by  Lender  in  connection  herewith  and  in  connection  with  the issuance of a commitment letter (if applicable), the closing of the Loan and the  collection  of  amounts  owed  pursuant  to  this  Term  Sheet  (including, without limitation, attorneys’ fees), regardless of whether or not the same are covered by the Good Faith Deposit or whether or not the Loan closes.  The Application Fee shall be non-refundable and shall be deemed fully earned by Lender upon receipt.  At closing, Lender shall refund to Borrower any portion of the Good Faith Deposit and Commitment Deposit (collectively, the “Deposits”) remaining after payment of all of Lender’s out of pocket costs. The unapplied portions of any Deposits may be retained by Lender in the event that the Loan fails to close due to any Loan Party’s (i) bad faith actions in connection therewith and/or (ii) failure to comply in a timely manner and/or breach of this Term Sheet and/or any commitment letter issued in connection herewith. The Loan Parties understand that the Deposits may not be sufficient to pay all of Lender’s expenses. Lender may require additional deposits to the Deposits from time to time if deemed necessary by Lender to be applied toward the payment of its expenses in connection herewith and in connection with the closing of the Loan, and Sponsor shall promptly pay such deposits to Lender upon demand from time to time.

 

Outside Closing Date:              

October 312012.  If the Loan is not funded and closed on or prior to the Outside Closing Date, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated. Additionally,  in  the  event  any  party  (other  than  Lender)  fails  to comply with or breaches any term or provision hereof, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated.

 

Closing Requirements:

Approval of the Loan will be subject to satisfactory completion of Lender’s underwriting and due diligence, including review and approval of all information that Lender deems pertinent in its sole discretion.  Upon acceptance of this Term Sheet, Lender shall provide Borrower with its underwriting and legal closing checklists, the terms of which must be satisfied prior to closing.   Sponsor and Borrower shall cooperate with Lender in satisfying the foregoing, including, without limitation, by granting Lender and its designees full access (subject to the rights of tenants) to all portions of the Property for inspection and testing purposes, including, but not limited to, Phase I and Phase II environmental inspections.

 

Broker:

The Loan Parties agree to pay any and all fees imposed or charged by all brokers, mortgage bankers and advisors (each a “Broker”) hired or contracted by any Loan Party or their affiliates who brought about the issuance of this Term Sheet or the consideration of the Loan, and agree to indemnify and hold Lender harmless from and against any and all claims, demands and liabilities for brokerage commissions, assignment fees, finder’s fees or other compensation whatsoever arising from this Term Sheet or Lender’s extending the Loan which may be asserted against Lender by any person.   The foregoing indemnity shall survive any termination hereof and the closing of the Loan.   The Loan Parties hereby represent and warrant that the only Broker engaged by the Loan Parties with respect hereto is Financial Funding, LLC. Lender hereby agrees to pay any and all fees imposed or charged by all Brokers hired solely by Lender.  The Loan Parties acknowledge (a) that any Broker is not an agent of Lender and has no power or authority to bind Lender, (b) agrees that Lender is not responsible for any recommendations or advice given to any Loan Party by any Broker, (c) that Lender and the Loan Parties are dealing at arms’-length with each other in  a  commercial lending transaction, (d)  that  no  fiduciary or  other special relationship exists or shall exist between Lender and the Loan Parties and (e) that none of the Loan Parties shall be entitled to rely on any assurances or waiver given, or statements made or actions taken, by any Broker which purport to bind Lender or modify or otherwise affect this Term Sheet or the Loan, unless Lender has, in its sole discretion agreed in writing with the Loan Parties to such assurances, waivers, statements, actions or modifications.  The Loan Parties acknowledge and agree that Lender may, in its sole discretion, pay fees or compensation to any Broker in connection with or arising out of the closing and funding of the Loan.  Such fees and compensation, if any, (i) shall be in addition to any fees which may be paid by any Loan Party to such Broker and (ii) create a potential conflict of interest for Broker in its relationship with the Loan Parties.  Such fees and compensation, if applicable, may include a direct, one-time payment, servicing fees and/or incentive payments based on volume and size of financings involving Lender and such Broker.

 

 

 

_____________________________________________________________________________________

  

XXXXXX Hotels – North Dakota Portfolio

Up to $22,500,000 Financing

 Summary of Terms and Conditions

The following is a preliminary summary of the indicative terms and conditions for the proposed financing (the "Loan").  These indicative terms and conditions reflect the current perception of market conditions by Lender and its respective affiliates as they relate to the Loan (based, in part, on information provided to Lender by Sponsor and/or Borrower), and are subject to change without notice.  This is a preliminary summary and does not define all of the terms and conditions of the Loan, but is a framework upon which preliminary documentation for this transaction would be structured, and is a basis for further discussion and negotiation of such terms as may be appropriate.  Under no circumstances shall the indicative terms and conditions constitute or be deemed to constitute a legally binding commitment on the part of Lender or any of its affiliates, nor shall it be construed as an offer or undertaking by Lender to issue or arrange or negotiate a commitment or the Loan or any other financing, or any commitment, offer, undertaking or agreement of any kind.  The Loan, if any, shall be subject to the due diligence review the results of which must be satisfactory to lender in its sole discretion, and completion  of other matters described in this summary of terms and conditions (the "Term Sheet") in a manner acceptable to Lender in its sole discretion, the approval by Lender's credit authorities, satisfactory secondary market conditions, and the execution and delivery of documentation satisfactory in form and substance to Lender and Lender's legal counsel.  Except at otherwise expressly provided in this Term Sheet, no rights, obligations or liabilities of any kind or nature whatsoever shall arise on the part of Lender or any of its affiliates as the result of the provisions of this Term Sheet.  This Term Sheet is confidential, and the indicative terms and conditions shall not be discussed with, or delivered to other persons (other than legal counsel, tax advisors or officers and directors of Sponsor and Borrower) without the prior written consent of Lender.

 

Property:

A two property hotel portfolio consisting of the following hotels:

    a 124 room hotel located at xxxxxx, ND

    a 248 room hotel located at xxxxxx, ND

Loan Amount:

Up to $22,500,000, subject to a minimum DSCR (described below) at closing of 2.00x, a minimum Debt Yield (described below) of no less than 15.0%, and subject to a maximum Loan to Value Ratio (described below) of 65.0%.  If the required DSCR, Debt Yield, Loan to Value Ratio, are not satisfied, Lender may, in its sole and absolute discretion, reduce the Loan Amount or decline to make the Loan and terminate the Borrower’s Loan request.

Interest Rate:

The “Interest Rate” shall be calculated by adding 318 basis points (the “Spread”) to the yield on the five (5) year on-the-run swap rate, however, in no event shall the Interest Rate be less than 4.75%.  The on-the-run five (5) year swap rate is the five (5) year U.S. Treasury rate, plus the five (5) year swap spread.  Interest on the outstanding Loan Amount, based on the Interest Rate, shall be payable monthly in arrears, calculated on the basis of the actual number of days in the month and a 360-day year.

Amortization:

A constant monthly payment of principal and interest will be due and payable on each Payment Date in an amount sufficient to fully amortize such Loan over a 20-year amortization schedule.

Borrower:

The borrower (the "Borrower") and its general partner/managing member shall each be a newly formed special purpose, bankruptcy-remote, U.S. entity acceptable to Lender which satisfies all applicable rating agency criteria and is formed exclusively for the purpose of owning and operating the Property or a "recycled" single purpose, bankruptcy remote U.S. entity, acceptable to Lender, which satisfies all applicable Lender and rating agency criteria, has never conducted any prior activity other than its ownership and operation of the Property, related personal property & FF&E and makes customary backwards representations.  In addition the Borrower shall have two (2) independent directors or independent managers in accordance with rating agency requirements.

Borrower shall deliver at closing of the Loan a bankruptcy remoteness and non-consolidation opinion in form and substance satisfactory to Lender and in accordance with rating agency requirements.

Sponsor:

xxxxx, to be approved by Lender in its sole and absolute discretion, on a joint and several basis.

Lender:

German American Capital Corporation or an affiliate.

Term:

The term of the Loan (the "Term") shall be five (5) years from the initial closing of the Loan.

DSCR:

The DSCR shall be calculated by dividing the underwritten net cash flow of the Property determined by Lender in its sole and absolute discretion (the “UWNCF”) by the debt service due on the Loan based on the actual interest rate on the Loan and assuming an amortization term of 20 years.

Debt Yield:

The Debt Yield shall be calculated by dividing the UWNCF by the Loan Amount.

Loan to Value Ratio:

The Loan to Value Ratio shall be established as the ratio of the amount of the Loan to the “as-is” value as shown in an MAI appraisal obtained by Lender at Borrower’s cost and approved by Lender in form and substance.

Security:

The Loan will be secured by, inter alia, (i) a first priority mortgage/deed of trust in the Borrower’s fee simple interest in the Property, (ii) an assignment of all leases and rents, licenses, contracts, agreements, accounts, receivables, personal property, furniture, fixtures and equipment, and an assignment of guest reservation software, customer data, trade names and other intellectual property used or useful in the operation of the Property and any other personal property relating to the Property and (iii) such other collateral customary for a loan of this type, including without limitation, a first priority perfected security interest in all accounts that are held by any manager for the benefit of the Borrower or the Property.

Brokers:

Borrower and Sponsor each represent and confirm that it has engaged Financial Funding, LLC as a broker for the Loan (the “Broker”) and shall be solely responsible for paying all fees and commissions due to such broker. Accordingly, it is hereby agreed that all costs, finders' fees, commissions, concessions remuneration or similar fees or compensation relating to the financing are the sole and absolute responsibility of Borrower and Sponsor.  Borrower and Sponsor each agree (on a joint and several basis) to indemnify and hold Lender and its affiliates harmless from and against any and all compensation sought by any party who makes claim for commission or compensation related to the Loan.  This section shall be binding upon Sponsor and Borrower.

 

Good Faith Deposit and Costs and Expenses:

$xx,xxx payable at the execution of this Summary of Terms and Conditions. Sponsor and Borrower shall pay all out-of-pocket expenses incurred by Lender and its affiliates in connection with the Loan, whether or not the Loan closes.  Such expenses may include, without limitation, legal fees, consultant fees, third party vendor fees, travel expenses, a loan processing fee of $7,500, which loan processing fee shall be fully earned and non-refundable at closing, syndication costs, bifurcation costs and expenses, due diligence costs, underwriting costs and other miscellaneous expenses.  If at any time Lender reasonably determines that the funds on deposit with Lender will not be sufficient to cover Lender’s anticipated expenses, upon request, Sponsor shall promptly deposit such additional funds as Lender may reasonably determine are necessary to cover such expenses.  Any unused deposits, other than the loan processing fee, will be credited to the Borrower at closing.

Standard Rate Lock; Loan Terms:

Subject to (i) the execution by Sponsor of Lender’s standard Interest Rate Lock Agreement and (ii) the delivery to Lender of a deposit equal to 2.0% of the Loan Amount, which will be refunded to Sponsor if and when the Loan closes, the Sponsor may lock the rate of the Loan ("Rate Lock") prior to the closing date of the Loan.  Borrower and Sponsor will bear all costs of any Rate Lock, including, without limitation, all hedging and breakage costs and per diem carrying expenses incurred in connection with the Rate Lock. 

If the Loan does not close on or before the expiration of the Rate Lock Period (as defined in the Interest Rate Lock Agreement), the Rate Lock shall terminate in Lender’s sole and absolute discretion and be of no further force and effect and Borrower and Sponsor shall be jointly and severally liable for any and all hedging and breakage costs and per diem carrying expenses incurred by Lender.

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