Financing of commercial properties
Financing of commercial properties is a product of VUB offering new business opportunities both for corporate companies and individuals. Commercial real estate financing includes acquisition loans, construction loans and investment loans. These loans are usually repaid on a long-term basis from the income originating from the rental or sale.
Financing of commercial properties is structured financing where borrower is mainly special purpose vehicle company (SPV) without other activities.
Who is the product designed for?
Commercial real estate financing is provided especially to:
- Real estate investors
- Corporate customers
- Construction companies
- Commercial clients
What kind of projects can the financing be used for?
Typical examples include:
- A class offices – with purpose of the long term lease with reliable clients
- Residential buildings – the purpose is sale of the flats
- Industrial and logistic centers – for tenants with strong economics background, with good accessibility and infrastructure
- Multifunctional buildings and commercial establishment – for stable tenants with strong economics background
Main real estate financing principles
- Loan to costs ratio (LTC) max. 70%, min. equity 30% - used before the first drawdown (preferred are projects with equity min. 35%)
- Loan to value ratio (LTV) max. 70%, min. equity 30%
- Prelease agreements – min. requirement of interest coverage 110% since the first year of repayment
- Prelease before the first drawdown of the construction loan min. 30-40% of the total sale/leaseable area
- Duration of the construction loan: max. 2 years for residential buildings and max. 3 years for commercial buildings but not longer than the construction phase.
- Duration of the investment loan: max. 5 years, in exceptional cases up to 7 years depending on the quality of building, terms of the lease agreement, market conditions, tenants and DSC. Premature loan repayment is possible.
What is necessary to submit to the real estate financing loan application?
Our clients are generally required to provide the following documents and information:
- Track record
- Project and business plan with cash flow projections during the tenor of the loan
- Financial calculations
- Reliable information on financial status
- Relevant agreements
- Abstract from the Real Estate Cadastre
- Abstract from the Commercial Register
Additional documents according to individual projects