In practice, do lenders allow monthly distributions to occur after stabilization (when interest coverage is achieved) but prior to payoff/perm loan takeout? Or does any cash flow after interest go to an escrow account of some sort and only get released at payoff/end of term?
Also, can someone please clarify how borrowers and lenders draw the line in regards to when interest can be capitalized (self funded by the loan facility) and when the borrower must start to pay? Or is the pro forma just an educated guess identifying when coverage could potentially occur and the month it actually happens triggers no further capitalization of payments?
Also, how are TI/LC costs handled in the loan docs? Will a reserve have to be set up? Thank you