CMBS Loans Explained

CMBS loans are a type of commercial real estate financing that is provided by lenders, pooled into groups of other loans in a process known as securitization, and sold on the secondary market to investors. CMBS loans, which are also known as conduit loans, can provide borrowers with low-interest, high-leverage financing without incredibly high credit or net worth requirements.

CMBS Loan Terms and Property Types

At CMBS.Loans, we have nearly two decades of expertise in arranging CMBS and conduit financing for a variety of property types, including apartments, office buildings, mixed-use buildings, mobile home parks, self-storage facilities, industrial properties, and much, much more. While CMBS loan terms can vary significantly according factors to including property type, property quality and condition, property location, and tenant quality, we’ve provided a list of standard conduit loan terms that represent a good snapshot of what you, the borrower, can expect from a CMBS loan.

Standard CMBS loan terms for income-producing commercial properties typically include:

  • Loan Size: $2 million minimum, no maximum

  • Loan Terms: 5-10 year fixed-rate terms with amortizations of 25-30 years

  • Eligible Properties: Varies by property type

  • Leverage:

    • Most properties: 75% maximum LTV/1.20-1.35x DSCR

    • Hotels: 70-75% maximum LTV/1.40-1.50x DSCR

    • Self-storage: 80% maximum LTV/1.25-1.35x DSCR

  • Pricing: Typically based on LTV and DSCR, rate buydowns are sometimes available

  • Assumability: CMBS loans are typically fully assumable, though a fee may apply

  • Prepayment Penalties: Defeasance or yield maintenance

  • Recourse: Typically non-recourse with standard bad-boy carveouts

  • Appraisals: Required, to be paid for by the borrower