More often than not, some portion of every commercial real estate transaction is financed with debt. Typically, that debt comes from a bank or non-bank lender who agrees to lend a certain amount of money in return for certain concessions from a borrower. For example, they will almost always require a 1st position mortgage on the property …
Suppose that a medium sized accounting firm is looking to expand its footprint by leasing office space in a new city. After touring several spaces, they have narrowed it down to two options. The options have similar rental rates, but the firm wants to conserve capital so they need to figure out which one is less …
A typical retail shopping center or mall works under a tried and true business plan. The owner and/or developer of the property works first to attract one or more “anchor” tenants and then surrounds them with a variety of smaller tenants who benefit from the traffic they create. Together, the anchor and their supporting tenants …
The development spread is a back of the envelope calculation widely used by real estate developers. It is a fast and easy way to size up the financial feasibility of a real estate development project, before completing a more in-depth analysis. In this article, we’ll take a closer look at the development spread and walk …
In the banking system, a fundamental agreement exists. When a customer opens an account and deposits money, they trust the bank to remain open, making their money accessible for withdrawal when needed. However, history tells us that this isn’t always the case. Throughout history, there is a long list of notable bank failures, the largest …
In some ways, a commercial real estate construction project is just like any other project. There is a start date, several interim milestones, and an end date when the property is complete and a certificate of occupancy has been issued. However, a commercial real estate construction loan is not like other loans. It is distinguished …
There is a wide spectrum of lease types in commercial real estate. To make it easier to communicate with others, it is not uncommon for complicated leases to be described using simple language. The ‘double net lease’ in commercial real estate is a term that describes a certain type of lease agreement, but it’s not …
There’s no doubt about it, construction lending is tough. From changing interest rates, long lead times, and freak weather events, there are a myriad of risks that can derail a project. However, from a lender’s perspective, there’s one risk that is top of mind when making a construction loan – the borrower’s ability to make …
Every investment involves a certain amount of risk. There are certain general sources of risk that influence all assets – things like geopolitical risk and global macroeconomic risk. What makes each asset unique is the level of sensitivity that its rate of return has to those risks. In addition, specific types of assets have risks …