CMBS Loans for Office Buildings and Commercial Properties

In this article:

1. Common Uses for CMBS Office Building Loans
2. CMBS Loan Property Types
3. CMBS Loan Terms for Office Buildings
4. Get a Free Office Building CMBS Loan Quote Today
5. Get Financing

Show full table of contents →

CMBS Loans has more than two decades of experience in arranging CMBS loans and CMBS refinancing for office buildings and other commercial properties throughout the United States. According to the U.S. Energy Information Administration, there are more than 5.6 million commercial buildings in the United States, with an estimated 87 billion square feet of floor space. And, with commercial real estate prices rising, now could be a great time to buy property, or improve the property that you already have.

Common Uses for CMBS Office Building Loans

Whether you’re an individual real estate investor, work for a large conglomerate, or are just a business owner who wants to own their own space, a CMBS loan can certainly come in handy. Businesses and investors often use CMBS loans for:

• Property acquisition: Buying a new office property is a great way to expand your footprint and invest in your financial future, and since CMBS loans have incredibly competitive interest rates, you can sleep well at night knowing that you’ve gotten a great deal.

• Cash-out refinancing: Whether you want funds to renovate your office property, money to invest into your core business, or simply want to take off to Tahiti, a CMBS cash-out refinance is a great way to pull equity out of your property. And, since CMBS loans don’t have the burdensome cash-out restrictions that often accompany traditional bank loans, you can usually take out as much as you want, up to the leverage limit of your specific loan.

• Rate or term refinancing: If you currently have a high-interest mortgage on an office building, or one with a balloon payment that you think you’ll struggle to make, you can use CMBS refinancing to either lower the interest rate, extend the term of your loan, or both.

CMBS Loan Property Types

Office and commercial property types that often utilize CMBS loans include:

• High-Rise Office Buildings: While the word “high-rise” might seem intimidating, most buildings 7 stories or higher are actually considered high-rises. This means that there are actually many thousands of these buildings throughout the U.S.--- and you might already be working in one.

• Large Medical Offices: Larger medical offices, as well as medical clinics and private hospitals can take advantage of CMBS financing to acquire or refinance property.

• Mixed-Use Buildings: Just because a building includes both apartments and office space doesn’t preclude it from getting a CMBS loan. And, with mixed-use developments gaining traction across the country, purchasing one of these properties could be great investment.

• Industrial Properties: If you own or operate a manufacturing or industrial company, you may want to own your own warehouse space, or, if you already own property, you may want to take out equity in the form of a CMBS cash-out refinance in order to get additional funds for your business.

• Shopping Malls: Whether you own or operate a small strip center or a large shopping mall, you may be looking for an alternative source of financing that doesn’t have the same restrictions as traditional bank loans. If so, a CMBS loan could also be a great choice.

CMBS Loan Terms for Office Buildings

Standard CMBS loan terms for office buildings typically include:

+ Loan Size: $2 million minimum, no maximum

+ Loan Terms: 5-10 year fixed-rate terms with amortizations of 25-30 years

+ Eligible Properties:

• Properties should be fully stabilized

• High-rise, low-rise, and office condos in central business districts (CBDs) and suburban areas are eligible

• Single-tenant, multi-tenant, and credit tenant lease properties permitted

• In general, CMBS loans are usually only extended to Class A and Class B properties

+ Leverage: 80% maximum LTV/1.25-1.35x DSCR

+ Pricing: Typically based on LTV and DSCR, rate buydowns are sometimes available

+ Assumability: CMBS office building loans are typically fully assumable, though a fee may apply

+ Prepayment Penalties: Defeasance or yield maintenance

+ Recourse: Typically non-recourse with standard bad-boy carveouts

+ Appraisals: Required, to be paid for by the borrower

+ Rate locks: Available at commitment, 30-day rate locks may also be available with lender approval

+ Occupancy requirements:

• If property is under a credit tenant lease, or has a major anchor tenant, their lease should extend beyond the term of the CMBS loan

• If the property has multiple smaller tenants, their lease expirations should be staggered as to reduce risk for the lender

Get a Free Office Building CMBS Loan Quote Today

If you’re looking for an office building or commercial property loan from $2,000,000 and up, simply click the button below for a fast, easy, and free quote from an experienced CMBS loan expert. You can also email us any time at desk@janover.co.

Get a quote