Commercial Real Estate Credit Memorandum
Can someone please outline a commercial real estate credit memorandum? This would be created by a lender.
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Hey enterprisevalued26, I'm the WSO Monkey Bot...do any of these help:
You're welcome.
What are you actually asking?
I think he's looking for an example or an outline of a lender's internal credit memo that would be sent to a credit committee.
They are pretty straightforward. Biggest thing is DSC and LTV. They'll also do multiple scenarios to show credit committee if occupancy falls X% and rent falls X%, that DSC will be still be X. Also some basic info on sponsor and portfolio. Some basic economic data on the market and some maps outlining the area. Also new supply is always a concern as well so they would want that info. Imagine an IOM package, but with a focus primarily on DSC, debt yield, and LTV.
Sponsor track record and guarantor financial analysis is a huge component of the credit writeups.
A very basic outline would be: 1. Who are they? 2. What do they want? 3. How are they going to pay us back? 4. Is the opportunity worth the risk? aka are we getting fairly paid for taking the risk? Is the loan structured to protect the downside should the project not work out?
Submarket and product type analysis are obviously crucial as well.
Any one have any ideas where an example of one could be found?
bump
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