Construction/Permanent Lending

Download PDF: Commercial Mortgage Lending - Construction/Permanent Lending
Download PDF: Commercial Mortgage Lending - Participating Construction Perm Program
 

Principal Real Estate Investors' construction perm program is seamless and time tested. It features one source of funds, one set of documents, one fixed rate, all with one institutional lender.


Property Types

  • Anchored Retail*
  • Office*
  • Industrial*
  • Multi-family

Loan Sizing

  • $15 million and above

Loan Terms

  • One set of loan documents that allow a smooth, seamless transition to convert to a permanent loan; interim construction loans also available
  • 2 to 30 years terms
  • Completion/carve-out guaranty required; ability to do non-recourse with regards to repayment
  • Fixed rate locked at application. Variable rate options also available.
  • Interest only, which typically accrues during construction period; amortization thereafter (transaction specific)
  • No tri-party agreements required
  • Acquisition/rehab transactions selectively underwritten

Geographic Location

  • Major metropolitan areas throughout the United States, plus some select secondary markets

Loan to Cost / Value

  • 35% equity typically required during construction (transaction specific)
  • Current fair market value of land may be credited toward required equity contribution
  • 65% loan to value upon completion, depending upon transaction
  • Underwriting focused on pro-forma stabilized value

Fees / Deposits

  • 1% origination fee
  • 2% good faith deposit

Reports

  • Phase I environmental
  • Seismic (as needed)
  • MAI appraisal
  • Construction consultant

Closing

  • Typically done in-house (subject to capacity) at a fixed fee with local counsel review

Prepayment Provisions

  • Yield maintenance last 90 days at par
  • Flexible prepayment provisions available

Draws

  • Monthly draws administered in-house

*Requires material pre-leasing

Disclosure

Principal Real Estate Investors, LLC (the “Firm”) is the dedicated real estate group of Principal Global Investors. The Firm is a registered investment adviser and a member of the Principal Financial Group. “The Principal Financial Group” and “The Principal” are registered trademarks of Principal Financial Services, Inc., a member of the Principal Financial Group.

The information in this document has been derived from sources believed to be accurate as of January 2016. Information derived from sources other than Principal Global Investors or its affiliates is believed to be reliable; however we do not independently verify or guarantee its accuracy or validity.

Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or omissions in this document.

The information in this document contains general information only and should not be considered as a comprehensive statement on any matter and should not be relied upon as such nor should it be construed as specific advice or recommendation. The general information it contains does not take account of any borrower’s objectives, particular needs or financial situation, nor should it be relied upon in any way as a forecast or guarantee of future events . All expressions of opinion and predictions in this document are subject to change without notice.

This document is issued in The United States by Principal Real Estate Investors, LLC, which is regulated by the U.S. Securities and Exchange Commission. Terms, conditions, fees, expenses, pricing and other general guidelines and provisions are subject to change.

As a general matter, commercial mortgage lending entails a degree of risk that is typically only suitable for sophisticated institutional and professional investors for whom such an investment is not a complete investment program and who fully understand and are capable of bearing the risks associated with such strategy.