Self Storage financing can fit into two broad categories: Owner-Occupied and Investor targeted loans.
Owner-Occupied self storage loans are available when the owners are prepared to sign personal recourse. Allowing for full recourse opens the door to bank portfolio loans and SBA loan products. Most often the interest rates from these lenders are on floating rates such as 2.0% plus the then Prime Rate as published by the Wall Street Journal. The good news is these lenders can offer lower loan amounts, can lend on new construction, and on properties that are not reached stabilized levels.
Loan amount: $500,000 and no upper limit. Except for SBA which limits their SBA guaranty to $5 million.
Term and Amortization: up to 25-years
Interest Rates: 3.00% over the like term US Treasury for 3, 5 and sometimes 7-years. Most often floating rates are 2.00% to 2.50% Plus Prime Rate as published in the Wall Street Journal.
Loan to value: 75% to 90% with SBA participation.
These lenders will consider smaller population centers.
Investor targeted loans are best when the sponsors wish to enter into a non-recourse loan with longer fixed rates on stabilized properties. These lenders are Commercial Mortgage Backed Securities (“CMBS”) lenders, also known as Wall Street lenders.
Loan amounts: $2 million and up.
Term: 5, 7, 10, 12 and 15-years
Amortization: 25 and 30-years
Loan to value: 65% to 75%
Non-recourse: subject to traditional bad boy carve-outs.
Interest Rates: 2.0% to 2.5% plus the then yield on the like term SWAP Rates.
Closing costs: Lender legal start at $9,000 with other third party reports in line with typical loan closings. The third party reports are appraisal, property condition report, phase one environmental (assume no issues), zoning reports, insurance review.
Larger population centers are best for this lender when for self storage loans.
Additional loan products for Self Storage Properties:
Self Storage new construction- nationwide:
Loan Amount: $2 million and up
Term: 3 to 6-years
LTC or Loan to costs: 90%
80% Loan to Costs First Mortgage
10% Loan to Costs Mezzanine Loan and 49.9% interest in project cash flows. This may seem high, but keep in mind the lender is bringing in half of the equity.
Rates: Normally fixed in the 6.5% – 7.0% range
Lender Origination Fee: 1.0%
Developers approved Fee: 5% goes back to developer as a Management fee from cash flows.
Guaranty: Completion Guaranty only. After Certificate of Occupancy is issued loans moves to traditional Non-Recourse loan terms.
Closing time frame: Normally 45-days.
We have many options for the self storage operator and stand ready to provide free competitive loan proposals normally within one business day of receiving the detailed loan package.
On our web site you can read about specific loan products: www.caffreyloans.com/loan-products, offered by Freddie Mac, Fannie Mae, HUD/FHA, Commercial Mortgage Back Securities (CMBS) and other loan products. Want more details on sample interest rates for apartment check out Interest Rates for Apartment Loans also on our web site: www.caffreyloans.com/apartment-loans.