Commercial Property Acquisitions
The objective is to understand the property, purchaser and transaction as a whole.
First National provides acquisition financing for qualified commercial real estate transactions.
For more than four decades, First National has originated, underwritten, closed and serviced commercial mortgage loans. As a Principal Lender, we evaluate acquisition financing directly based upon the property, purchase price and basis, borrower equity, sponsorship, operations and overall transaction structure.
First National begins with an initial review of the property, sponsorship and acquisition economics.
When appropriate, First National may proceed to a legally binding Letter of Intent (LOI), followed by formal underwriting, due diligence, required third-party reports, final approval and closing.
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Preparing for acquisition financing starts with understanding what a lender will evaluate. Our complimentary guide covers purchase price and basis, borrower equity, property operations, sponsorship, post-closing capital needs and each step of First National’s loan process.
It also outlines the initial review package to help you organize the information typically needed before starting a financing conversation.
An agreed purchase price does not independently determine the amount First National will lend.
First National considers the purchaser’s basis, actual borrower equity, property performance, market value and overall credit structure.
Where an appraisal is required, it is ordered directly by First National. Final loan structure is determined following underwriting and consideration of the appraisal and other relevant credit factors.
For an income-producing property, First National reviews the operations supporting the acquisition.
Depending upon the property, this may include historical financial statements, current operating results, rent rolls, occupancy, leases and other property-specific information.
Specialized properties may require additional review of the business operations associated with the real estate.
A commercial real estate acquisition begins with an agreed purchase price, but a lender must look beyond that number.
The lender needs to understand what is being acquired, what the purchaser is actually investing and how the property is expected to perform following closing.
Borrower equity establishes the purchaser’s financial commitment. Historical operations help establish how the property has performed. Planned renovations, repositioning or other capital requirements can affect the true cost of the acquisition and the capital needed after closing.
Sponsorship is also important. Relevant ownership or operating experience, liquidity and financial capacity become particularly significant when acquiring a specialized or operationally intensive property.
First National therefore evaluates the property, purchaser and transaction together, rather than relying upon purchase price or valuation alone.
A borrower or representative should generally be prepared to provide:
