MMR Realty Advisors
3701 Maywood Court
214.924.6026
Carrollton, TX 75007

Other Loan Types
Hotels
Offices
Apartments
Industrial
Mobile Home Park
Retail
Self-Storage
Mezzanine
Small








MEZZANINE FINANCING
Eligible Properties: Apartment, office, retail, industrial, hotel and mobile homes.
Eligible Property Locations: Nationwide
Loan Size: $500,000 and greater on property for which MMR is providing first lien financing. $5,000,000 and greater when MMR is only the mezzanine lender.
Recourse: Non-recourse except for standard carve outs.
Loan Type: Permanent, fixed rate, LIBOR
Loan Term: Coterminous with the maturity of the first lien financing. Due on sale or on pay off of the first lien financing..
All-In Yield: Minimum of 15%. The loan may have a pay and accrual feature with a minimum pay rate of 10%. After achieving the minimum pay rate of 10% and the required base amortization, cash flow should be applied in the following manner: (1) to achieve the 15% interest rate; (2) to repay any outstanding accrual; and (3) towards a negotiated percentage split to accelerate the repayment of principal. However, item (3) is not mandatory. The difference between the interest payable at the pay rate and the accrual rate shall be added to the outstanding principal balance of the Mezzanine Loan but in no event shall the accrual amount exceed ten percent (10%) of the original principal balance of the Mezzanine Loan on the last day of the accrual period.
Base Amortilization: Coterminous with the amortization of the first lien financing. A 10% interest rate should be used in calculating the debt service constant.
Loan Fees: Minimum 1.0% fee, payable 1/2% at commitment and 1/2% at closing. (1.0% fee not to be considered in calculating the all-in-yield).
Underwriting: First lien financing and mezzanine debt are to be underwritten on trailing 12 month operating numbers. Will consider annualizing year to date operating numbers for certain property types. Total debt should underwrite to a 1.10 DSCR on the 10% pay rate.
Security: Assignment of all Partnership interests in the mezzanine borrower.
Partnership Interest: A to-be-formed MMR subsidiary shall purchase and own a 0.5% General Partnership interest and a 0.5% Limited Partnership interest in the Mezzanine Borrower. In addition, this MMR subsidiary shall also own a 0.5% General Partnership and a 0.5% Limited Partnership interest in the entity which owns the property. The 0.5% interest in the General Partner of the Borrower will have the right to become the managing general partner in the event of a default of either the first trust or mezzanine debt. The purchase price of MMR's general partnership interest will be determined by the appraised value of the real property less all non operating debt, adjusted to value MMR's percentage interest. Following the repayment in full of the mezzanine loan, the 5% interest in the General Partnership interest shall convert to a limited partnership interest and the MMR subsidiary shall retain such interest in the Borrower. At no time shall the MMR subsidiary be subject to any additional capital contribution calls or be subject to dilution or spin down. In the event of default, the MMR subsidiary shall (1) have the right to become the managing General Partner of the mezzanine Borrower; and (2) will have the option to purchase the remaining partnership interests in the Mezzanine Borrower. The purchase price will be established through a determination of value using a predetermined capitalization rate and a predetermined method of calculating NOI. NOI will be determined in accordance with normal underwriting methods/standards (capital reserves, management fees, tenant improvement, etc). The capitalization rate should be at the higher of 11% or the then current 10 year Treasury note rate plus 400 basis points. Property value will be determined by dividing the NOI by the capitalization rate. The value of the equity will be determined by subtracting all outstanding debt, including accrued interest, from the property value. The value of each partner's interest will be determined by multiplying the total equity value by the percentage interest in the partnership held by the partners.


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MMR Realty Advisors
3701 Maywood Court
Carrollton, TX 75007
Phone: 214.924.6026
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MMR Realty Advisors