GlobeSt.com Talks SBA 504 Refi With Liberty SBFSeptember 10, 2016
GlobeSt.com Boston sat with Liberty SBF CEO, Alex Cohen, to talk about SBA 504 lending and the New England market. Below you can read the full text of the Q&A. The original article ran on GlobeSt.com website here.
Liberty SBF Looks To Tap Into Boston’s Refinance Market
by John Jordan
BOSTON—Commercial real estate finance firm Liberty SBF is eyeing the New England market for growth and is looking to help eligible businesses refinance the nearly $2 billion in maturing CMBS loans coming due in the next six month in Greater Boston.
Liberty, which has headquarters in Philadelphia and Los Angeles, is marketing its loan servicing platforms that include bridge loans as well as SBA (Small Business Administration) 504 loans to both property owners and small businesses in the region.
In an interview with Globest.com, Liberty SBF CEO Alex Cohen cites figures from Trepp that indicate nearly $2 billion in CMBS loans in Greater Boston are coming due in the next six months. Approximately $1.36 billion in maturing CMBS loans in Boston are for office properties, $181 million for retail properties, $141 million for retail, $86 million for multi-family properties and more than $62 million for self-storage properties.
A total of $115 million in those CMBS loans are eligible for refinance via the SBA 504 loan program, Cohen says. Eligible borrowers can access 90% loan-to-cost financing on loans of up to $15 million. Eligible deals include the acquisition or refinance of owner-occupied, hospitality, multi-use and special purpose properties. Loan terms can run as long as 25 years.
Cohen notes that a majority of the maturing CMBS loans in the next six months in Boston are in the self-storage ($62.4 million) and hospitality ($52.4 million) sectors.
“Our plan is to have an office in New England by the end of this year and most likely that office will be in Boston,” Cohen says. The firm’s Philadelphia office is currently responsible for the Boston market. “We understand that the (New England) market needs to be focused on with boots on the ground. It’s a market that we are very interest in lending into and we see a lot of great growth trajectory in the Boston market,” he says.
Liberty also has offices in New York City and Chicago. Cohen, in a published report in the Houston Chronicle, also says that Liberty SBF plans to open an office in Texas later this year.
Nationwide, Cohen notes that there will be more than $145 billion in CMBS loans that will mature over the next 12 months. Of that, more than $56 billion in CMBS loans fit the eligibility for SBA 504 financing.
He adds that last year Congress passed legislation that now allows lenders to offer the SBA 504 program for conventional real estate debt for small businesses. Previously, the program had been an acquisition only program. The SBA began accepting applications under the revised regulations on June 24th of this year. The SBA is authorized to approve up to $7.5 billion for the regular 504 Loan Program and $7.5 billion in lending authority under the 504 Debt Refinancing Program, which brings the total 504 lending combined authorization to $15 billion.
Cohen notes that the SBA 504 program provides a unique opportunity to borrowers whose CMBS or conventional loans are under water and affords them an opportunity to tap into a higher-leveraged refinance of existing debt. He notes that the program is particularly advantageous for “assets types that tread the line between investment real estate and owner-occupied real estate, such as hotels, self-storage and assisted living (properties).”
Since Liberty’s formation in 2012, the company has closed $75 million in SBA 504 loans.