Structured Debt


Download PDF: Commercial Mortgage Lending - Structured Debt

 

Principal Real Estate Investors' Structured Debt programs offer competitive debt options, tailored to meet the needs of your clients. With multiple sources, our product mix of mezzanine debt, light bridge debt, B-notes, preferred equity, and full-leveraged debt stack options provide a variety of financing vehicles to provide solutions for your clients.


The Principal Real Estate Investors Advantage

  • Experience: Principal Real Estate Investors has invested over $2.5 billion in subordinate debt/bridge since 2010. We have negotiated Intercreditor Agreements and closed loans with 27 senior lenders.
  • Flexibility: Principal Real Estate Investors offers competitive options tailored to meet borrowers' specific needs. Our products cover a broad risk spectrum with rates in the 6-10% range.
  • Process: Principal Real Estate Investors applies our life company approach to our execution. For mezzanine loans, we can work behind the scenes through a senior lender or directly with a sponsor to ensure the most efficient process and minimize concern of having two lenders.
  • Consistency: Your local underwriting contact runs the deal in conjunction with the Principal Real Estate Investors High Yield team.
  • Borrower Friendly: The borrower community will view Principal Real Estate Investors as a Lender, not a predatory investor.
  • Servicing: Principal Real Estate Investors services our services our subordinate debt and bridge loans internally with the same experienced group that runs our mortgage servicing.

 

General Guidelines

High Leverage Subordinate Debt

  • LTV: Up to 85%
  • DY: 6%+ targeted DY
  • Loan Sizes: $10 - 100 million
  • Terms: 2-10 years
  • Pricing: Floating rate L+700-950 bps/Fixed rate 7-10%

Conservative Subordinate Debt

  • LTV: Up to 70% +/-
  • DY: 8-12% +/-
  • Loan Sizes: $10 - 75 million
  • Terms: 2-10 years
  • Pricing: Floating rate L+500-700 bps/Fixed rate 5.25-7%

Full Debt Stack/Light Bridge Debt

  • LTV: Up to 80%
  • DY: Deal specific - pricing driven by NCF
  • Loan Sizes: $20 - 75 million
  • Terms: 2-5 years
  • Pricing: Floating rate L+300-400 bps plus origination and exit fees (where applicable)
  • Prepay: Typically call protection for 1/2 of the loan term

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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.