Continuing with yesterday's theme of ground leases, I am pleased to announce that after further investigation. I was able to locate one lender, that would do everything that we wanted. So, if you have a ground lease. You will be able to do a loan for the term of the ground lease or less not greater, and at 90% loan-to-value, if the deal cash flows.
It just goes to show you that by making numerous phone calls, to numerous lenders, there are still deals out there ready to close. Lenders need to lend their money to good solid deals. A ground lease should not be considered a deterrent for a good solid deal.
The ground lease should only factor in as it relates to the cash flow for the project. Not for anything else. The rent paid for the property must obviously be factored into the cash flow to determine if the net operating income of the property can support the new debt service, as well as the ground lease.
It goes without saying that the underwriter would have to study the terms of the ground lease to make a final determination. The legal department would also want to review the ground lease to make sure that the collateral can be secured, and to ensure that there are no other legal barriers to the financing.
Visit Lightning Commercial Funding for more information on investor property loans.