CRE-Finance REVIEW: Customer Satisfaction Commitment: CRE-Finance is dedicated to customer satisfaction. CRE-Finance implemented strategic changes ensuring client success, focusing on finding ways to assist client's search for new opportunities effectively, even in challenging business climate we face today.
ABOUT THE RIPOFF REPORT BELOW:
Ripoff Report would like to let readers know that Ripoff Report emailed this customer so the member business could make things right with them. When a business joins the Corporate Advocacy Program, Ripoff Report emails everyone from the past so the member business can make things right with them. Of course, everything within reason. In order to confirm that the complaints were resolved, Ripoff Report is copied on all responses so we can insure that the member business did right by their customer. Sadly, the author of the complaint below was unreasonable and didn’t allow CRE-Finance the opportunity to make things right with them within reason.
STATEMENT FROM CRE-FINANCE:
We strive for customer service and when this posting was brought to our attention, we reached out to client and we were able to resolve the matter in a satisfactory manner. The author of this post had updated his post confirming the acceptable resolution.
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I cannot say that Financial Funding LLC aka CRE-Finance LLC ("FFLLC") aka AmeriFinancial cheated me. Then again I never gave them a chance to.
I have been a Connecticut Based Real Estate Developer for 35 years. I was seeking funding for a larger commercial development and contacted my own Mortgage Broker who I believe to be reputable ("Reputable Broker"). My Reputable Broker was contacted by FFLLC thru LinkedIn and FFLLC represented themselves to be Wall Street based direct lenders aka conduit lenders aka correspondent lenders looking for larger commerical deals in the Northeast. Reputable Broker presented FFLLC my project and FFLLC prepared a term sheet offering financing. Reputable Broker presented FFLLC my 2nd project and FFLLC prepared a term sheet offering financing for the 2nd project. Reputable Broker presented the term sheets to me. Neither Reputable Broker or I had started the customary back checking process.
The deal was almost too good to be true. But then again, I have seen better and worse deals in my 35 years and I had no reason to believe the offer was outside market parameters. I had an online conference with Richard Tretsky and all seemed well enough. I had a second online meeting with Richard Tretsky and for some reason I felt uneasy. Mind you, we had not started to do the usual extensive background checks.
Tretsky was asking for a $20,000 non-refundable underwriting fee. So I started checking. I did not like what I saw:
So I could not say Treksky et al were not legit, but we certainly had a cloud of doubt. So we asked in writing for Richard Treksky to produce references from his banks, references from people who have successfully borrowed from him in the past and a list of recent loans (tombstones) place in the past year.
We had no reply.
2 Updates & Rebuttals
Connecticut Developer
Glastonbury,Connecticut,
Update
#3Author of original report
Mon, March 24, 2014
I filed a report against CRE-Financial LLC, aka Financial Funding LLC; and named AmeriFinancial, Richard Tretsky, Todd Tretsky and Dametria Hardwick. Since the time that I filed the report, the firm has responded to my complaint in a satisfactory manner. I have requested the support desk of RipOff report to removed my original posting.
Financial Funding LLC
NY,New York,
In response to the complaint from Connecticut Developer, Glastonbury, CT
#3REBUTTAL Owner of company
Fri, March 21, 2014
The loan request for the construction project in Glastonbury CT, known as The Shoppes at Avalon was presented to the company by the "reputable broker (Steve Lazar)" as a single construction deal. The "reputable broker" Steve Lazar of Bridwell Sargent, LLC, presented over 400 pages to the credit analyst to review and was himself unsure of the type of financing in total the borrower was looking for. The owner of the Bridwell Sargent, LLC (Peter Sargent) was at no time and in no way involved in this loan request. The initial offering was reviewed and an offer presented to Steve Lazar by way of a traditional Letter of Intent for the financing of a retail center only.
At that time, an initial conference call with John Sakon, Steve Lazar and Rich Tretsky took place at which time the borrower informed management of the deal he was looking for, which was financing for the retail shops and the hotel construction, and requested a Term Sheet instead of a Letter of Intent. John Sakon advised Mr. Tretsky that this deal would be done with only him and no other sponsors as he had already obtained a grant from the hotel franchise. Yet, The Shoppes at Avalon website details that they were in talks for joint venture REIT financing back in 2006, yet financing has not yet been secured. Anyone knowledgeable regarding the construction financing in the commercial world, knows how difficult it is to ascertain. Which will explain why Sakon Development, LLC and John Sakon has been seeking financing for this property since 2006.
Also, a reputable broker would know that a $20,000 underwriting fee for a $43.5 million loan in three phases is extremely inexpensive. John Sakon stated on the conference call with Rich Tretsky that he thought the fee was extremely reasonable and he preferred to pay the valuation costs at the time they arise. Also, he preferred having CRE Finance do the leg work securing conduit financing for him instead of him doing it himself as he knows how difficult it is and the fees are easily three times what we were charging and financing was not guaranteed with the "big Wall Street firms".
The very "reputable broker", Steve Lazar, was told prior to each conference call to bring all questions to the table at each call so the borrower got a level of comfort with the deal. At no time were references requested and if they were, there are plenty to offer. We want to demonstrate over $47 million in transactions and in the next week or so, we will have more to announce.
If the borrower had reservations regarding our offices, it would have been very simple to take a drive to our offices in New York or New Jersey from Glastonbury, CT. The trip to our New York office would have taken a mere hour and forty five minutes; to our New Jersey offices would have taken two hours and forty five minutes. That is not an extensive drive to ease your mind regarding financing with which you are in need of, prior to sending any funds to the company.
Needless to say, no deal ever materialized from the Letter of Intent and Term Sheet issued for this deal. That does not negate that the loan offerings were read, conference calls were had and the broker and the sponsor had direct contact with upper management. Because they did not feel this deal was right for them, they did not execute. That does not constitute a ripoff. It is best the relationship ended where it did.
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Greystone Servicing Corporation, Inc.
To: Todd Tretsky
Financial Funding LLC
From: Greystone Funding Corporation
Date: September 18, 2012
RE: Georgetown Apartments Term Sheet
Greystone Servicing Corporation, Inc. ("Greystone") is pleased to submit the following loan term sheet in regard to the project referenced above based on the information you have supplied to us. The basic terms are described below and would be under the Fannie Mae Delegated Underwriting and Servicing ("DUS") Program. This term sheet is based on the information provided to us and the current rates as of the date indicated above. It should be noted that approval of this loan by the Greystone committee could be subject to obtaining certain waivers from Fannie Mae.
Terms:
Loan Amount: $2,137,500
Loan Term: 10-Year Term
Amortization: 30 Years
Prepayment Terms: 9.5 years YM, then 3 months pre-pay at 1%, and last 90 days open to prepay at par
Rate Determination*: Currently estimated at 4.27%
Estimated Spread*: 248 bps over the 10-Year Treasury
Max LTV/Min DSC: 75%/1.25x, as determined in underwriting
Loan Purpose: Acquisition
Recourse: Non-Recourse
*Spread and rate change daily until locked.
Application Fee and Third Party Reports
The application fee is $8500 and is nonrefundable. The fee is an estimate of Greystone's actual cost of processing the application, which includes the costs of an appraisal, a Phase I environmental study, an engineering report, travel expenses, credit reports, processing fees and any other third party expenses that may be incurred. Lender incurred costs above the application fee will be collected at closing from the Borrower.
Loan Fees
Lender Legal Fees: Included in the application fee
Origination Fee: 1.0% of the loan amount due at closing
Good Faith Deposit: 1% of the loan amount due at rate lock, refunded post closing
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CITIGROUP GLOBAL MARKETS REALTY CORP.
Summary of Terms and Conditions
This Summary of Terms and Conditions outlines certain of the terms and conditions relating to the request for the extension of a loan financing with respect to the Property (the "Loan"). These terms and conditions are subject to modification or adjustment as determined by Lender and are only a summary of the terms and conditions which shall be more fully set forth in the documents and/or instruments to be executed in connection with the Loan (collectively, the "Loan Documents"). In the event the Loan is funded, the terms and conditions contained herein shall be superseded by the Loan Documents, and the Loan Documents shall govern the terms and conditions of the Loan without reference to this Term Sheet.
Borrower:
The borrower(s) under the Loan (whether one or more, collectively and individually (as the context may require), the “Borrower”) shall each be (i) newly formed or recycled single-purpose, bankruptcy remote entities, (ii) formed exclusively for the purpose of owning and operating the Property or Properties, (iii) satisfactory to Lender in all respects, and (iv) comply with all applicable rating agency criteria.
Sponsor:
Xxxxx
Property:
a xx,xxx sq. foot single tenant Walgreens retail building in Columbus GA, commonly known as Walgreens
Loan Amount:
An amount not to exceed $2,950,000
Purpose of Financing:
The Loan proceeds will be used by Borrower to refinance any existing mortgage and mezzanine indebtedness secured directly or indirectly by the Property.
Interest Rate:
The interest rate shall be fixed at a per annum rate equal to the greater of (a) the sum of (i) 290 basis points plus (ii) the value of the 10 year “on the run” U.S. Treasury rate, rounded up to the nearest 1/8th of 1%; (b) the sum of (i) 290 basis points plus (ii) the value of the 10 year “offer-side” swap rate (as determined by Lender) rounded up to the nearest 1/8th of 1%; and (c) 4.69%. Interest shall accrue based on a 360-day year and the actual number of days elapsed. Lender reserves all rights to adjust the spread applicable to the Loan at any time prior to closing.
Minimum DSCR:
As of the closing date, pursuant to the final Interest Rate and based upon underwritten net cash flow, each as determined by Lender, a minimum debt service coverage ratio (“DSCR”) of 1.30 to 1.00 at the greater of the actual debt service constant and 9.30%.
Minimum Debt Yield:
12% debt yield (“DY”) based upon underwritten net cash flow as determined by Lender.
Maximum LTV:
Loan to value ratio (“LTV”) not to exceed 57.5% based upon a FIRREA appraisal acceptable to Lender.
Term:
10 years
Amortization Term:
Fifteen (15) years
Collateral:
The Loan will be secured by a first mortgage or deed of trust on Borrower’s fee and/or leasehold interests in the Property; personal property (tangible and intangible) and fixtures; applicable reserves; a collateral assignment of all operating licenses, leases, management agreements, and all other agreements, each relating to the Property. If the Property (or any portion thereof and/or interest therein) is held by virtue of a leasehold interest, the applicable lease must contain finance ability provisions satisfactory to Lender and the rating agencies and a satisfactory estoppel and agreement from the fee owner and each other applicable party must be provided. Lender shall have the right to require that (i) each Property be owned by a separate Borrower, (ii) one or more of the liens on the Properties be cross-defaulted and cross-collateralized and (iii) any one or more of such “crossed” liens be “uncrossed” in connection with any Secondary Market Transaction (defined below) or otherwise.
Recourse:
Except for “bad boy” acts specified in the Loan Documents, the Loan shall be nonrecourse for which personal liability of Borrower and Sponsor shall be limited to the collateral for the Loan. Sponsor or another individual acceptable to Lender shall execute a recourse carve out guaranty with respect to the aforesaid “bad boy” acts. Additionally, each of Borrower and Sponsor shall enter into an environmental indemnity agreement in favor of Lender.
Fees / Deposits:
The following fees and deposits shall be payable by Applicant in connection herewith:
(i) a $xx,xxx Application Fee, payable upon execution hereof.
(ii) a $xx,xxx Good Faith Deposit, payable upon execution hereof and to be used to cover Lender’s out of pocket expenses incurred in connection herewith.
(iii) if a commitment is requested by Borrower, a Commitment Deposit equal to 1% of the principal amount of the Loan, to be paid upon the execution by Lender of a commitment letter (if issued) and to be used to cover Lender’s out of pocket expenses incurred in connection with said commitment.
Each of Applicant, Borrower and Sponsor (each, a “Loan Party” and, collectively, the “Loan Parties”) shall be responsible for all expenses incurred by Lender in connection herewith and in connection with the issuance of a commitment letter (if applicable), the closing of the Loan and the collection of amounts owed pursuant to this Term Sheet (including, without limitation, attorneys’ fees), regardless of whether or not the same are covered by the Good Faith Deposit or whether or not the Loan closes. The Application Fee shall be non-refundable and shall be deemed fully earned by Lender upon receipt. At closing, Lender shall refund to Borrower any portion of the Good Faith Deposit and Commitment Deposit (collectively, the “Deposits”) remaining after payment of all of Lender’s out of pocket costs. The unapplied portions of any Deposits may be retained by Lender in the event that the Loan fails to close due to any Loan Party’s (i) bad faith actions in connection therewith and/or (ii) failure to comply in a timely manner and/or breach of this Term Sheet and/or any commitment letter issued in connection herewith. The Loan Parties understand that the Deposits may not be sufficient to pay all of Lender’s expenses. Lender may require additional deposits to the Deposits from time to time if deemed necessary by Lender to be applied toward the payment of its expenses in connection herewith and in connection with the closing of the Loan, and Sponsor shall promptly pay such deposits to Lender upon demand from time to time.
Outside Closing Date:
October 31, 2012. If the Loan is not funded and closed on or prior to the Outside Closing Date, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated. Additionally, in the event any party (other than Lender) fails to comply with or breaches any term or provision hereof, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated.
Closing Requirements:
Approval of the Loan will be subject to satisfactory completion of Lender’s underwriting and due diligence, including review and approval of all information that Lender deems pertinent in its sole discretion. Upon acceptance of this Term Sheet, Lender shall provide Borrower with its underwriting and legal closing checklists, the terms of which must be satisfied prior to closing. Sponsor and Borrower shall cooperate with Lender in satisfying the foregoing, including, without limitation, by granting Lender and its designees full access (subject to the rights of tenants) to all portions of the Property for inspection and testing purposes, including, but not limited to, Phase I and Phase II environmental inspections.
Broker:
The Loan Parties agree to pay any and all fees imposed or charged by all brokers, mortgage bankers and advisors (each a “Broker”) hired or contracted by any Loan Party or their affiliates who brought about the issuance of this Term Sheet or the consideration of the Loan, and agree to indemnify and hold Lender harmless from and against any and all claims, demands and liabilities for brokerage commissions, assignment fees, finder’s fees or other compensation whatsoever arising from this Term Sheet or Lender’s extending the Loan which may be asserted against Lender by any person. The foregoing indemnity shall survive any termination hereof and the closing of the Loan. The Loan Parties hereby represent and warrant that the only Broker engaged by the Loan Parties with respect hereto is Financial Funding, LLC. Lender hereby agrees to pay any and all fees imposed or charged by all Brokers hired solely by Lender. The Loan Parties acknowledge (a) that any Broker is not an agent of Lender and has no power or authority to bind Lender, (b) agrees that Lender is not responsible for any recommendations or advice given to any Loan Party by any Broker, (c) that Lender and the Loan Parties are dealing at arms’-length with each other in a commercial lending transaction, (d) that no fiduciary or other special relationship exists or shall exist between Lender and the Loan Parties and (e) that none of the Loan Parties shall be entitled to rely on any assurances or waiver given, or statements made or actions taken, by any Broker which purport to bind Lender or modify or otherwise affect this Term Sheet or the Loan, unless Lender has, in its sole discretion agreed in writing with the Loan Parties to such assurances, waivers, statements, actions or modifications. The Loan Parties acknowledge and agree that Lender may, in its sole discretion, pay fees or compensation to any Broker in connection with or arising out of the closing and funding of the Loan. Such fees and compensation, if any, (i) shall be in addition to any fees which may be paid by any Loan Party to such Broker and (ii) create a potential conflict of interest for Broker in its relationship with the Loan Parties. Such fees and compensation, if applicable, may include a direct, one-time payment, servicing fees and/or incentive payments based on volume and size of financings involving Lender and such Broker.
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Summary of Certain Indicative Terms
April 10, 2013
Collateral:
(i) xxxxx Casa Grande, a 77 key hotel located at xxxxxx, Casa Grande, AZ and (ii) xxxxxxx Casa Grande, a 42 key hotel located at xxxxxx Casa Grande AZ.
Borrower:
To be a newly formed or recycled single-purpose limited liability company or limited partnership acceptable to Lender.
Key Principal:
Individual(s) or entity(ies) acceptable to Lender, with net worth and liquidity requirements to be determined by Lender during diligence and underwriting.
Loan Amount:
$7,400,000 (in aggregate).
Loan Term:
10 Years.
Amortization:
25 years.
Maximum Closing Loan-to-Value:
65%.
Minimum Closing Debt Service Coverage:
1.50x based on Lender's underwritten net cash flow.
Minimum Closing Debt Yield:
11.50% based on Lender's underwritten net cash flow.
Minimum Underwritten NCF:
$870,000.
Interest Rate:
The greater of (i) the sum of (a) the 10-year swap rate and (b) 295 basis points and (ii) 4.90%, with interest payable monthly in arrears, calculated on an actual / 360 basis.
Expense Deposit:
$xx,xxx in the aggregate.
Recourse:
Non-recourse to Key Principals except for customary bad-boy carve-outs.
This Summary of Certain Indicative Terms has been prepared for the sole purpose of discussing an opportunity to make a loan and to set forth certain terms on which such transaction would be conditioned. This is not a commitment by Ladder Capital to provide financing to any party in any amount, whether described herein or otherwise. Neither party hereto will have any obligation to the other party with respect to the proposed transaction until execution of definitive and binding financing documentation between the parties in a form acceptable to each of the parties. Notwithstanding anything else contained herein, the closing of the proposed transaction is expressly subject to the approval of Ladder Capital investment committee.
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CITIGROUP GLOBAL MARKETS REALTY CORP.
Summary of Terms and Conditions
This Summary of Terms and Conditions outlines certain of the terms and conditions relating to the request for the extension of a loan financing with respect to the Property (the "Loan"). These terms and conditions are subject to modification or adjustment as determined by Lender and are only a summary of the terms and conditions which shall be more fully set forth in the documents and/or instruments to be executed in connection with the Loan (collectively, the "Loan Documents"). In the event the Loan is funded, the terms and conditions contained herein shall be superseded by the Loan Documents, and the Loan Documents shall govern the terms and conditions of the Loan without reference to this Term Sheet.
Borrower:
The borrower(s) under the Loan (whether one or more, collectively and individually (as the context may require), the “Borrower”) shall each be (i) newly formed or recycled single-purpose, bankruptcy remote entities, (ii) formed exclusively for the purpose of owning and operating the Property or Properties, (iii) satisfactory to Lender in all respects, and (iv) comply with all applicable rating agency criteria.
Sponsor:
Xxxxx
Property:
a xx,xxx sq. foot single tenant Walgreens retail building in Albany GA, commonly known as Walgreens
Loan Amount:
An amount not to exceed $2,975,000.
Purpose of Financing:
The Loan proceeds will be used by Borrower to refinance any existing mortgage and mezzanine indebtedness secured directly or indirectly by the Property.
Interest Rate:
The interest rate shall be fixed at a per annum rate equal to the greater of (a) the sum of (i) 290 basis points plus (ii) the value of the 10 year “on the run” U.S. Treasury rate, rounded up to the nearest 1/8th of 1%; (b) the sum of (i) 290 basis points plus (ii) the value of the 10 year “offer-side” swap rate (as determined by Lender) rounded up to the nearest 1/8th of 1%; and (c) 4.69%. Interest shall accrue based on a 360-day year and the actual number of days elapsed. Lender reserves all rights to adjust the spread applicable to the Loan at any time prior to closing.
Minimum DSCR:
As of the closing date, pursuant to the final Interest Rate and based upon underwritten net cash flow, each as determined by Lender, a minimum debt service coverage ratio (“DSCR”) of 1.30 to 1.00 at the greater of the actual debt service constant and 9.30%.
Minimum Debt Yield:
12% debt yield (“DY”) based upon underwritten net cash flow as determined by Lender.
Maximum LTV:
Loan to value ratio (“LTV”) not to exceed 57.5% based upon a FIRREA appraisal acceptable to Lender.
Term:
10 years
Amortization Term:
Fifteen (15) years
Collateral:
The Loan will be secured by a first mortgage or deed of trust on Borrower’s fee and/or leasehold interests in the Property; personal property (tangible and intangible) and fixtures; applicable reserves; a collateral assignment of all operating licenses, leases, management agreements, and all other agreements, each relating to the Property. If the Property (or any portion thereof and/or interest therein) is held by virtue of a leasehold interest, the applicable lease must contain finance ability provisions satisfactory to Lender and the rating agencies and a satisfactory estoppel and agreement from the fee owner and each other applicable party must be provided. Lender shall have the right to require that (i) each Property be owned by a separate Borrower, (ii) one or more of the liens on the Properties be cross-defaulted and cross-collateralized and (iii) any one or more of such “crossed” liens be “uncrossed” in connection with any Secondary Market Transaction (defined below) or otherwise.
Recourse:
Except for “bad boy” acts specified in the Loan Documents, the Loan shall be nonrecourse for which personal liability of Borrower and Sponsor shall be limited to the collateral for the Loan. Sponsor or another individual acceptable to Lender shall execute a recourse carve out guaranty with respect to the aforesaid “bad boy” acts. Additionally, each of Borrower and Sponsor shall enter into an environmental indemnity agreement in favor of Lender.
Fees / Deposits:
The following fees and deposits shall be payable by Applicant in connection herewith:
(i) a $xx,xxx Application Fee, payable upon execution hereof.
(ii) a $xx,xxx Good Faith Deposit, payable upon execution hereof and to be used to cover Lender’s out of pocket expenses incurred in connection herewith.
(iii) if a commitment is requested by Borrower, a Commitment Deposit equal to 1% of the principal amount of the Loan, to be paid upon the execution by Lender of a commitment letter (if issued) and to be used to cover Lender’s out of pocket expenses incurred in connection with said commitment.
Each of Applicant, Borrower and Sponsor (each, a “Loan Party” and, collectively, the “Loan Parties”) shall be responsible for all expenses incurred by Lender in connection herewith and in connection with the issuance of a commitment letter (if applicable), the closing of the Loan and the collection of amounts owed pursuant to this Term Sheet (including, without limitation, attorneys’ fees), regardless of whether or not the same are covered by the Good Faith Deposit or whether or not the Loan closes. The Application Fee shall be non-refundable and shall be deemed fully earned by Lender upon receipt. At closing, Lender shall refund to Borrower any portion of the Good Faith Deposit and Commitment Deposit (collectively, the “Deposits”) remaining after payment of all of Lender’s out of pocket costs. The unapplied portions of any Deposits may be retained by Lender in the event that the Loan fails to close due to any Loan Party’s (i) bad faith actions in connection therewith and/or (ii) failure to comply in a timely manner and/or breach of this Term Sheet and/or any commitment letter issued in connection herewith. The Loan Parties understand that the Deposits may not be sufficient to pay all of Lender’s expenses. Lender may require additional deposits to the Deposits from time to time if deemed necessary by Lender to be applied toward the payment of its expenses in connection herewith and in connection with the closing of the Loan, and Sponsor shall promptly pay such deposits to Lender upon demand from time to time.
Outside Closing Date:
October 31, 2012. If the Loan is not funded and closed on or prior to the Outside Closing Date, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated. Additionally, in the event any party (other than Lender) fails to comply with or breaches any term or provision hereof, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated.
Closing Requirements:
Approval of the Loan will be subject to satisfactory completion of Lender’s underwriting and due diligence, including review and approval of all information that Lender deems pertinent in its sole discretion. Upon acceptance of this Term Sheet, Lender shall provide Borrower with its underwriting and legal closing checklists, the terms of which must be satisfied prior to closing. Sponsor and Borrower shall cooperate with Lender in satisfying the foregoing, including, without limitation, by granting Lender and its designees full access (subject to the rights of tenants) to all portions of the Property for inspection and testing purposes, including, but not limited to, Phase I and Phase II environmental inspections.
Broker:
The Loan Parties agree to pay any and all fees imposed or charged by all brokers, mortgage bankers and advisors (each a “Broker”) hired or contracted by any Loan Party or their affiliates who brought about the issuance of this Term Sheet or the consideration of the Loan, and agree to indemnify and hold Lender harmless from and against any and all claims, demands and liabilities for brokerage commissions, assignment fees, finder’s fees or other compensation whatsoever arising from this Term Sheet or Lender’s extending the Loan which may be asserted against Lender by any person. The foregoing indemnity shall survive any termination hereof and the closing of the Loan. The Loan Parties hereby represent and warrant that the only Broker engaged by the Loan Parties with respect hereto is Financial Funding, LLC. Lender hereby agrees to pay any and all fees imposed or charged by all Brokers hired solely by Lender. The Loan Parties acknowledge (a) that any Broker is not an agent of Lender and has no power or authority to bind Lender, (b) agrees that Lender is not responsible for any recommendations or advice given to any Loan Party by any Broker, (c) that Lender and the Loan Parties are dealing at arms’-length with each other in a commercial lending transaction, (d) that no fiduciary or other special relationship exists or shall exist between Lender and the Loan Parties and (e) that none of the Loan Parties shall be entitled to rely on any assurances or waiver given, or statements made or actions taken, by any Broker which purport to bind Lender or modify or otherwise affect this Term Sheet or the Loan, unless Lender has, in its sole discretion agreed in writing with the Loan Parties to such assurances, waivers, statements, actions or modifications. The Loan Parties acknowledge and agree that Lender may, in its sole discretion, pay fees or compensation to any Broker in connection with or arising out of the closing and funding of the Loan. Such fees and compensation, if any, (i) shall be in addition to any fees which may be paid by any Loan Party to such Broker and (ii) create a potential conflict of interest for Broker in its relationship with the Loan Parties. Such fees and compensation, if applicable, may include a direct, one-time payment, servicing fees and/or incentive payments based on volume and size of financings involving Lender and such Broker.
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TERM SHEET
July 15, 2013
This Term Sheet, together with the Cover Letter dated July 15, 2013 forms the Application for the Loan to Borrower (as defined below) to be considered by Lender. All capitalized terms used and not otherwise defined in this Term Sheet shall have the meanings given to such terms in the Cover Letter.
Property Address: XXXXX, CA 93454.
Property Type: Retail.
Interest of Borrower: Leasehold.
Purpose of Financing: Refinancing.
Lender: Ladder Capital Finance LLC (or an affiliate thereof), and its successors and/or assigns.
Borrower: To be a newly formed or recycled single-purpose limited liability company or limited partnership acceptable to Lender, with two independent directors.
Key Principal: Individual(s) or entity(ies) acceptable to Lender, with net worth and liquidity requirements to be determined by Lender during diligence and underwriting.
Loan Amount: Up to $6,100,000, subject to the terms and conditions set forth in this Application.
Limitations on Loan Amount: On the date of Closing, the Loan shall have: (i) a loan-to-value ratio (the “LTVR”) of no greater than 70% and (ii) (a) a minimum debt service coverage ratio (“DSCR”) of 1.30x, based on the greater of the actual debt service constant and 6.934% (representing the constant on the date of this Application) and (b) a minimum debt yield of 8.9%, in each case using Lender’s underwritten net cash flow.
Collateral: Lender shall have a first priority lien on Borrower’s leasehold interest in the Property, including a first priority assignment of all leases, rents, issues and profits and a first priority and perfected security interest in all personal property, licenses, permits, contract rights, general intangibles and other assets of Borrower used in connection with the operation, maintenance and management of the Property, to be evidenced and secured by Lender’s standard loan documents (the “Loan Documents”).
Maturity Date: 10 years after the first payment date after the Closing.
Interest Rate: A fixed rate to be determined as follows:
The greater of (i) the sum of (a) the 10-year offered side swap rate and (b)
285 basis points and (ii) 5.60%, with interest payable monthly in arrears, calculated on an actual/360 basis.
Rate Lock: Borrower shall have the option of entering into Lender’s standard form rate lock agreement with Lender prior to Closing. The rate lock agreement shall be accompanied by a non-refundable rate lock deposit equal to 2% of the amount being locked.
Amortization: Thirty (30) year schedule.
Closing: The closing of the Loan shall occur no earlier than the first business day after Applicant and/or Borrower have satisfied all of Lender’s requirements, including the Closing Conditions and any other terms and conditions set forth in this Application.
Correspondent: Borrower shall (i) represent to Lender the identity of all finders or correspondents engaged by Borrower in connection with the Loan, initially represented to be solely Financial Funding, LLC, (ii) pay any and all commissions and other similar fees owing in connection with the parties identified in (i) other than as set forth in the broker disclosure letter referenced in the following paragraph, and (iii) indemnify and defend Lender from and against all costs and expenses incurred by Lender as a result of a breach of the foregoing or otherwise in connection with any claim for a brokerage commission or fee made against Lender with respect to the Loan.
Confidentiality: This Application is being delivered with the understanding that neither it nor the substance thereof shall be disclosed by Borrower or any Key Principal or any of their respective affiliates to any third person, except those who are in confidential relationships to any of them (i.e., Borrower’s counsel, accountants and other retained business advisors) or as may be required by law.
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CITIGROUP GLOBAL MARKETS REALTY CORP.
Summary of Terms and Conditions
This Summary of Terms and Conditions outlines certain of the terms and conditions relating to the request for the extension of a loan financing with respect to the Property (the "Loan"). These terms and conditions are subject to modification or adjustment as determined by Lender and are only a summary of the terms and conditions which shall be more fully set forth in the documents and/or instruments to be executed in connection with the Loan (collectively, the "Loan Documents"). In the event the Loan is funded, the terms and conditions contained herein shall be superseded by the Loan Documents, and the Loan Documents shall govern the terms and conditions of the Loan without reference to this Term Sheet.
Borrower:
The borrower(s) under the Loan (whether one or more, collectively and individually (as the context may require), the “Borrower”) shall each be (i) newly formed or recycled single-purpose, bankruptcy remote entities, (ii) formed exclusively for the purpose of owning and operating the Property or Properties, (iii) satisfactory to Lender in all respects, and (iv) comply with all applicable rating agency criteria.
Sponsor:
Xxxxx
Property:
a 16,000 sq. foot single tenant Walgreens retail building in Columbus GA, commonly known as Walgreens
Loan Amount:
An amount not to exceed $3,000,000.
Purpose of Financing:
The Loan proceeds will be used by Borrower to refinance any existing mortgage and mezzanine indebtedness secured directly or indirectly by the Property.
Interest Rate:
The interest rate shall be fixed at a per annum rate equal to the greater of (a) the sum of (i) 290 basis points plus (ii) the value of the 10 year “on the run” U.S. Treasury rate, rounded up to the nearest 1/8th of 1%; (b) the sum of (i) 290 basis points plus (ii) the value of the 10 year “offer-side” swap rate (as determined by Lender) rounded up to the nearest 1/8th of 1%; and (c) 4.69%. Interest shall accrue based on a 360-day year and the actual number of days elapsed. Lender reserves all rights to adjust the spread applicable to the Loan at any time prior to closing.
Minimum DSCR:
As of the closing date, pursuant to the final Interest Rate and based upon underwritten net cash flow, each as determined by Lender, a minimum debt service coverage ratio (“DSCR”) of 1.30 to 1.00 at the greater of the actual debt service constant and 9.30%.
Minimum Debt Yield:
12% debt yield (“DY”) based upon underwritten net cash flow as determined by Lender.
Maximum LTV:
Loan to value ratio (“LTV”) not to exceed 57.5% based upon a FIRREA appraisal acceptable to Lender.
Term:
10 years
Amortization Term:
Fifteen (15) years
Collateral:
The Loan will be secured by a first mortgage or deed of trust on Borrower’s fee and/or leasehold interests in the Property; personal property (tangible and intangible) and fixtures; applicable reserves; a collateral assignment of all operating licenses, leases, management agreements, and all other agreements, each relating to the Property. If the Property (or any portion thereof and/or interest therein) is held by virtue of a leasehold interest, the applicable lease must contain finance ability provisions satisfactory to Lender and the rating agencies and a satisfactory estoppel and agreement from the fee owner and each other applicable party must be provided. Lender shall have the right to require that (i) each Property be owned by a separate Borrower, (ii) one or more of the liens on the Properties be cross-defaulted and cross-collateralized and (iii) any one or more of such “crossed” liens be “uncrossed” in connection with any Secondary Market Transaction (defined below) or otherwise.
Recourse:
Except for “bad boy” acts specified in the Loan Documents, the Loan shall be nonrecourse for which personal liability of Borrower and Sponsor shall be limited to the collateral for the Loan. Sponsor or another individual acceptable to Lender shall execute a recourse carve out guaranty with respect to the aforesaid “bad boy” acts. Additionally, each of Borrower and Sponsor shall enter into an environmental indemnity agreement in favor of Lender.
Fees / Deposits:
The following fees and deposits shall be payable by Applicant in connection herewith:
(i) a $xx,xxx Application Fee, payable upon execution hereof.
(ii) a $xx,xxx Good Faith Deposit, payable upon execution hereof and to be used to cover Lender’s out of pocket expenses incurred in connection herewith.
(iii) if a commitment is requested by Borrower, a Commitment Deposit equal to 1% of the principal amount of the Loan, to be paid upon the execution by Lender of a commitment letter (if issued) and to be used to cover Lender’s out of pocket expenses incurred in connection with said commitment.
Each of Applicant, Borrower and Sponsor (each, a “Loan Party” and, collectively, the “Loan Parties”) shall be responsible for all expenses incurred by Lender in connection herewith and in connection with the issuance of a commitment letter (if applicable), the closing of the Loan and the collection of amounts owed pursuant to this Term Sheet (including, without limitation, attorneys’ fees), regardless of whether or not the same are covered by the Good Faith Deposit or whether or not the Loan closes. The Application Fee shall be non-refundable and shall be deemed fully earned by Lender upon receipt. At closing, Lender shall refund to Borrower any portion of the Good Faith Deposit and Commitment Deposit (collectively, the “Deposits”) remaining after payment of all of Lender’s out of pocket costs. The unapplied portions of any Deposits may be retained by Lender in the event that the Loan fails to close due to any Loan Party’s (i) bad faith actions in connection therewith and/or (ii) failure to comply in a timely manner and/or breach of this Term Sheet and/or any commitment letter issued in connection herewith. The Loan Parties understand that the Deposits may not be sufficient to pay all of Lender’s expenses. Lender may require additional deposits to the Deposits from time to time if deemed necessary by Lender to be applied toward the payment of its expenses in connection herewith and in connection with the closing of the Loan, and Sponsor shall promptly pay such deposits to Lender upon demand from time to time.
Outside Closing Date:
October 31, 2012. If the Loan is not funded and closed on or prior to the Outside Closing Date, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated. Additionally, in the event any party (other than Lender) fails to comply with or breaches any term or provision hereof, this Term Sheet shall, at Lender’s option and without notice to any Loan Party, be deemed terminated.
Closing Requirements:
Approval of the Loan will be subject to satisfactory completion of Lender’s underwriting and due diligence, including review and approval of all information that Lender deems pertinent in its sole discretion. Upon acceptance of this Term Sheet, Lender shall provide Borrower with its underwriting and legal closing checklists, the terms of which must be satisfied prior to closing. Sponsor and Borrower shall cooperate with Lender in satisfying the foregoing, including, without limitation, by granting Lender and its designees full access (subject to the rights of tenants) to all portions of the Property for inspection and testing purposes, including, but not limited to, Phase I and Phase II environmental inspections.
Broker:
The Loan Parties agree to pay any and all fees imposed or charged by all brokers, mortgage bankers and advisors (each a “Broker”) hired or contracted by any Loan Party or their affiliates who brought about the issuance of this Term Sheet or the consideration of the Loan, and agree to indemnify and hold Lender harmless from and against any and all claims, demands and liabilities for brokerage commissions, assignment fees, finder’s fees or other compensation whatsoever arising from this Term Sheet or Lender’s extending the Loan which may be asserted against Lender by any person. The foregoing indemnity shall survive any termination hereof and the closing of the Loan. The Loan Parties hereby represent and warrant that the only Broker engaged by the Loan Parties with respect hereto is Financial Funding, LLC. Lender hereby agrees to pay any and all fees imposed or charged by all Brokers hired solely by Lender. The Loan Parties acknowledge (a) that any Broker is not an agent of Lender and has no power or authority to bind Lender, (b) agrees that Lender is not responsible for any recommendations or advice given to any Loan Party by any Broker, (c) that Lender and the Loan Parties are dealing at arms’-length with each other in a commercial lending transaction, (d) that no fiduciary or other special relationship exists or shall exist between Lender and the Loan Parties and (e) that none of the Loan Parties shall be entitled to rely on any assurances or waiver given, or statements made or actions taken, by any Broker which purport to bind Lender or modify or otherwise affect this Term Sheet or the Loan, unless Lender has, in its sole discretion agreed in writing with the Loan Parties to such assurances, waivers, statements, actions or modifications. The Loan Parties acknowledge and agree that Lender may, in its sole discretion, pay fees or compensation to any Broker in connection with or arising out of the closing and funding of the Loan. Such fees and compensation, if any, (i) shall be in addition to any fees which may be paid by any Loan Party to such Broker and (ii) create a potential conflict of interest for Broker in its relationship with the Loan Parties. Such fees and compensation, if applicable, may include a direct, one-time payment, servicing fees and/or incentive payments based on volume and size of financings involving Lender and such Broker.
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XXXXXX Hotels – North Dakota Portfolio
Up to $22,500,000 Financing
Summary of Terms and Conditions
The following is a preliminary summary of the indicative terms and conditions for the proposed financing (the "Loan"). These indicative terms and conditions reflect the current perception of market conditions by Lender and its respective affiliates as they relate to the Loan (based, in part, on information provided to Lender by Sponsor and/or Borrower), and are subject to change without notice. This is a preliminary summary and does not define all of the terms and conditions of the Loan, but is a framework upon which preliminary documentation for this transaction would be structured, and is a basis for further discussion and negotiation of such terms as may be appropriate. Under no circumstances shall the indicative terms and conditions constitute or be deemed to constitute a legally binding commitment on the part of Lender or any of its affiliates, nor shall it be construed as an offer or undertaking by Lender to issue or arrange or negotiate a commitment or the Loan or any other financing, or any commitment, offer, undertaking or agreement of any kind. The Loan, if any, shall be subject to the due diligence review the results of which must be satisfactory to lender in its sole discretion, and completion of other matters described in this summary of terms and conditions (the "Term Sheet") in a manner acceptable to Lender in its sole discretion, the approval by Lender's credit authorities, satisfactory secondary market conditions, and the execution and delivery of documentation satisfactory in form and substance to Lender and Lender's legal counsel. Except at otherwise expressly provided in this Term Sheet, no rights, obligations or liabilities of any kind or nature whatsoever shall arise on the part of Lender or any of its affiliates as the result of the provisions of this Term Sheet. This Term Sheet is confidential, and the indicative terms and conditions shall not be discussed with, or delivered to other persons (other than legal counsel, tax advisors or officers and directors of Sponsor and Borrower) without the prior written consent of Lender.
Property:
A two property hotel portfolio consisting of the following hotels:
a 124 room hotel located at xxxxxx, ND
a 248 room hotel located at xxxxxx, ND
Loan Amount:
Up to $22,500,000, subject to a minimum DSCR (described below) at closing of 2.00x, a minimum Debt Yield (described below) of no less than 15.0%, and subject to a maximum Loan to Value Ratio (described below) of 65.0%. If the required DSCR, Debt Yield, Loan to Value Ratio, are not satisfied, Lender may, in its sole and absolute discretion, reduce the Loan Amount or decline to make the Loan and terminate the Borrower’s Loan request.
Interest Rate:
The “Interest Rate” shall be calculated by adding 318 basis points (the “Spread”) to the yield on the five (5) year on-the-run swap rate, however, in no event shall the Interest Rate be less than 4.75%. The on-the-run five (5) year swap rate is the five (5) year U.S. Treasury rate, plus the five (5) year swap spread. Interest on the outstanding Loan Amount, based on the Interest Rate, shall be payable monthly in arrears, calculated on the basis of the actual number of days in the month and a 360-day year.
Amortization:
A constant monthly payment of principal and interest will be due and payable on each Payment Date in an amount sufficient to fully amortize such Loan over a 20-year amortization schedule.
Borrower:
The borrower (the "Borrower") and its general partner/managing member shall each be a newly formed special purpose, bankruptcy-remote, U.S. entity acceptable to Lender which satisfies all applicable rating agency criteria and is formed exclusively for the purpose of owning and operating the Property or a "recycled" single purpose, bankruptcy remote U.S. entity, acceptable to Lender, which satisfies all applicable Lender and rating agency criteria, has never conducted any prior activity other than its ownership and operation of the Property, related personal property & FF&E and makes customary backwards representations. In addition the Borrower shall have two (2) independent directors or independent managers in accordance with rating agency requirements.
Borrower shall deliver at closing of the Loan a bankruptcy remoteness and non-consolidation opinion in form and substance satisfactory to Lender and in accordance with rating agency requirements.
Sponsor:
xxxxx, to be approved by Lender in its sole and absolute discretion, on a joint and several basis.
Lender:
German American Capital Corporation or an affiliate.
Term:
The term of the Loan (the "Term") shall be five (5) years from the initial closing of the Loan.
DSCR:
The DSCR shall be calculated by dividing the underwritten net cash flow of the Property determined by Lender in its sole and absolute discretion (the “UWNCF”) by the debt service due on the Loan based on the actual interest rate on the Loan and assuming an amortization term of 20 years.
Debt Yield:
The Debt Yield shall be calculated by dividing the UWNCF by the Loan Amount.
Loan to Value Ratio:
The Loan to Value Ratio shall be established as the ratio of the amount of the Loan to the “as-is” value as shown in an MAI appraisal obtained by Lender at Borrower’s cost and approved by Lender in form and substance.
Security:
The Loan will be secured by, inter alia, (i) a first priority mortgage/deed of trust in the Borrower’s fee simple interest in the Property, (ii) an assignment of all leases and rents, licenses, contracts, agreements, accounts, receivables, personal property, furniture, fixtures and equipment, and an assignment of guest reservation software, customer data, trade names and other intellectual property used or useful in the operation of the Property and any other personal property relating to the Property and (iii) such other collateral customary for a loan of this type, including without limitation, a first priority perfected security interest in all accounts that are held by any manager for the benefit of the Borrower or the Property.
Brokers:
Borrower and Sponsor each represent and confirm that it has engaged Financial Funding, LLC as a broker for the Loan (the “Broker”) and shall be solely responsible for paying all fees and commissions due to such broker. Accordingly, it is hereby agreed that all costs, finders' fees, commissions, concessions remuneration or similar fees or compensation relating to the financing are the sole and absolute responsibility of Borrower and Sponsor. Borrower and Sponsor each agree (on a joint and several basis) to indemnify and hold Lender and its affiliates harmless from and against any and all compensation sought by any party who makes claim for commission or compensation related to the Loan. This section shall be binding upon Sponsor and Borrower.
Good Faith Deposit and Costs and Expenses:
$xx,xxx payable at the execution of this Summary of Terms and Conditions. Sponsor and Borrower shall pay all out-of-pocket expenses incurred by Lender and its affiliates in connection with the Loan, whether or not the Loan closes. Such expenses may include, without limitation, legal fees, consultant fees, third party vendor fees, travel expenses, a loan processing fee of $7,500, which loan processing fee shall be fully earned and non-refundable at closing, syndication costs, bifurcation costs and expenses, due diligence costs, underwriting costs and other miscellaneous expenses. If at any time Lender reasonably determines that the funds on deposit with Lender will not be sufficient to cover Lender’s anticipated expenses, upon request, Sponsor shall promptly deposit such additional funds as Lender may reasonably determine are necessary to cover such expenses. Any unused deposits, other than the loan processing fee, will be credited to the Borrower at closing.
Standard Rate Lock; Loan Terms:
Subject to (i) the execution by Sponsor of Lender’s standard Interest Rate Lock Agreement and (ii) the delivery to Lender of a deposit equal to 2.0% of the Loan Amount, which will be refunded to Sponsor if and when the Loan closes, the Sponsor may lock the rate of the Loan ("Rate Lock") prior to the closing date of the Loan. Borrower and Sponsor will bear all costs of any Rate Lock, including, without limitation, all hedging and breakage costs and per diem carrying expenses incurred in connection with the Rate Lock.
If the Loan does not close on or before the expiration of the Rate Lock Period (as defined in the Interest Rate Lock Agreement), the Rate Lock shall terminate in Lender’s sole and absolute discretion and be of no further force and effect and Borrower and Sponsor shall be jointly and severally liable for any and all hedging and breakage costs and per diem carrying expenses incurred by Lender.
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