Financing America's Triple Net Lease Properties And 1031 Exchanges Since 1971

Frequently Asked Questions

At Marabella Commercial Finance, we believe each financial transaction deserves one-on-one attention and we strive to answer all questions that arise throughout the loan process. Below is a selection of frequently asked questions from our clients:

Q: What will be analyzed when underwriting a single tenant retail or restaurant permanent finance arrangement?

A: Considerations include evaluation of the property (land, building), specific location, surrounding area, lease, operating statements, rent roll, financial condition of the tenant and the products they offer. Moreover, an underwriter will examine the borrowers specific needs and any other information they feel is pertinent to the transaction.

Q: What is meant when a lender asks if a subject property is in an anchored center?

A: An anchored center is where several large major retail stores occupy the shopping center where the subject property is located.

Q: How will the interest rate for the loan be effected if the subject property is in an anchored center?

A: Normally, our Lenders offer a better interest rate (lower interest rate spread) and more favorable loan terms if the subject property is located around major retail tenant(s). The rationale is that large tenants attract more business to the subject property allowing sales to be more beneficial at the specific location and reducing the likelihood of the tenant vacating the subject property.

Q: How long does it normally take to complete a loan?

A: It normally takes 20 to 40 days to receive a loan commitment from the time the Lender’s Application Letter, Letter of Interest or Conditional Commitment Letter is signed by the borrower and good faith and deposit monies for third party reports are sent to the lender. The typical closing period start to finish is normally 40 to 60 days. Timing can vary from transaction to transaction and the previous mentioned timing may not apply to all transactions. While Marabella Commercial Finance does not guarantee timing expressed or implied in anyway due to timing variables out of our control, we strive to complete each and every loan within our clients specific needs.

Q: If the appraisal and environmental reports are completed for a property before coming to Marabella Commercial Finance for a loan and are less than one year old, is Marabella Commercial Finance able to utilize these reports?

A: Normally the lenders we work with are able to utilize or update (for a cost) appraisal and environmental reports if they are under one year old and are acceptable to the direct lender. The cost involved in updating an appraisal and/or environmental report is considerably less than undergoing a completely new report in most cases. In some cases however, the lender will review a report(s) and require that a new report(s) be performed at full cost to the borrower.

Q: What is important financial information to the lender (underwriter) regarding the tenant occupying the property?

A: Lenders will evaluate a tenant by many financial measurements and each lender has a different set of financial criteria that they analyze. Most lenders look at the “Net Worth” or if a public company, the “Shareholders Equity”. Both of these financial measurements are excellent indicators of the staying power of the tenant if sales slow down. Lenders also look to the bond rating of the tenant. Generally, Standard and Poors is the rating agency of choice. An important criteria which lenders review is if a tenant is investment grade or less than investment grade. Any company which has an S & P rating which is equal to or above BBB- is considered investment grade. Any company which has a rating which is equal to or less than BB+ is considered less than investment grade. Investment grade tenants will be offered lower interest rates (lower spreads) than less than investment grade since the risk of insolvency is much less for investment grade tenants. While most of our transactions are within investment grade ratings, we work with several lenders who underwrite less than investment grade tenants with specific requirements.

Q: What is meant when a lender is quoting a spread?

A: A spread is normally the difference between the index (10 year treasury note) and the interest rate. If an index for example is at 2.00% and the spread over the index is 300 basis points then the interest rate will be 5.00% (2.00+3.00=5.00%).

Q: Which single tenant retail properties do lenders prefer most?

A: Lenders favor properties that are easily retrofitted or easily compatible with other users. Lenders feel that it is easier to convert a square retail box building (pharmacy, grocery store, auto parts store, video store) than to convert a property such as a bowling alley, car wash preschool or other special use property.

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