Sometimes an office building may contain some retail and vice versa. In many cases, the ground floor is retail and the second and third (or more) are office. This category refers to those with a 10% or higher component of retail space – different from the category “mixed use,” which is commonly used to refer to apartments and retail.
These buildings are underwritten on the basis of the commercial leases for the office and retail. If the loan amounts approach a million dollars, there is non-recourse financing available to such facilities. Under that figure, the loans are mainly recourse to the principals of the borrowing entity.
The office/retail and or office/warehouse condominium became popular in the late 20th century as interest rates declined and development costs soared. The loans generally available to these facilities are designed for smaller enterprises so they feature personal recourse as well as fixed and variable rates.
These loans are underwritten on the financial productivity of the business occupying the space. Condominium dues are considered part of operating costs for purposes of underwriting.
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HOW EQUINET WORKS
