If by “non-recourse” you mean CMBS then you will not be able to avoid significant pre-pay penalty (i.e. defeasance or yield maintenance) because the bonds that the loan is packaged into do not allow for any variation in the payment stream from individual mortgages.
I don’t know what “Starwood” is (other than the Marriott merged company). If you’re talking about a bank then of course it’s whatever you can negotiate with the bank.
Quarterly financials are typical. On of our loans has a $10,000/item fine for failure to provide. This is just a “scary stick” to make sure they can require you to send reports. Another has $500.
Lender will say they need to see all sorts of documents but in practice you can usually wait until they ask for specific items they want. In our case, there is a list of about 15 things we’re supposed to provide but they only really need P&L and sometimes the balance sheet plus some explanations.
Lender will certainly want to approve CAPEX if they are escrowing maintenance reserve, but this is typically not a big hassle. And if you have CAPEX that you want to invest without getting reimbursed, the lender is unlikely to care.
Prohibiting the Borrower from giving guarantee is probably typical. So you will NOT be able to use the CASH program. Tough.
Fees (and restrictions) – well, that’s the flip side to the lower interest rates that CMBS market provides.
Our loan docs require GAAP accounting “or other suitable method.” You’re probably fine unless you are in Default whereupon the Lender will take a closer interest in what they can.
Here’s some cut-and-paste from our loan docs.
6.3.3 Monthly/Quarterly Reports. Borrower shall furnish to Lender within fifteen (15) days after the end of each calendar month or calendar quarter (as indicated below) the following items:
(i) monthly and year-to-date operating statements, noting Net Operating Income and other information necessary and sufficient under GAAP (or other accounting method reasonably acceptable to Lender) to fairly represent the financial position and results of operation of the Property during such calendar month, all in form satisfactory to Lender; (ii) a balance sheet for such calendar month; (iii) a comparison of the budgeted income and expenses and the actual income and expenses for each month and year-to-date for the Property, together with a detailed explanation of any variances of ten percent (10%) or more between budgeted and actual amounts
for such period and year-to-date; (iv) a statement of the actual Capital Expenses made by Borrower during each calendar quarter as of the last day of such calendar quarter; (v) a statement that Borrower has not incurred any indebtedness other than indebtedness permitted hereunder; (vi) an aged receivables report; and (vii) rent rolls identifying the leased premises, names of all tenants, units leased, monthly rental and all other charges payable under each Lease, date to which paid, term of Lease, date of occupancy, date of expiration and a delinquency report for the Property.
Each such statement shall be accompanied by an Officer’s Certificate certifying, to the best of the signer’s knowledge, (1) that such items are true, correct, accurate, and complete and fairly present the financial condition and results of the operations of Borrower and the Property in accordance with GAAP (or other accounting method reasonably acceptable to Lender) (subject to normal yearend adjustments), (2) whether there exists a
efault or Event of Default, and if so, the nature thereof, the period of time it has existed and the action then being taken to remedy it, (3) that as of the date of such Officer’s Certificate, no litigation exists involving Borrower or the Property in which the amount involved is $162,500 (in the aggregate) or more or in which all or substantially
all of the potential liability is not covered by insurance, or, if so, specifying such litigation and the actions being taken in relation thereto and (4) the amount by which operating expenses incurred by Borrower for such period were greater than or less than the operating expenses reflected in the applicable Annual Budget. Such financial statements shall contain such other information as shall be reasonably requested by Lender for purposes of calculations to be made by Lender pursuant to the terms hereof. Notwithstanding anything to the contrary set forth in this Section 6.3.3, after the occurrence of a Secondary Market Transaction, Borrower shall no longer be required to provide the items set forth in this Section 6.3.3 on a monthly basis (and consequently, references herein to “month”, “monthly” and “calendar month” shall then mean and refer to, respectively, “quarter”,
“quarterly” and “calendar quarter”).
3.10 BOOKS AND RECORDS. (a) Each Borrower (i.e., each of Borrower 1 and Borrower 2
separately) shall separately keep adequate books and records of account in accordance with sound accounting
principals, consistently applied, and furnish to Lender:
(i) such Borrower’s respective monthly operating statements of the Property, prepared and
certified by the respective Borrower in the form reasonably required by Lender, detailing the revenues
received, the expenses incurred and the net operating income before and after debt service (principal and
interest) and major capital improvements for that month and containing appropriate year to date
information, and containing a comparison for such month with the annual budget delivered pursuant to
Subsection 3.10(a)(v), within thirty (30) days after the end of each calendar month, provided however,
upon the transfer of the Loan in connection with a securitization, such financial statements shall be due
quarterly within thirty (30) days after the end of each applicable calendar quarter; and for each month a
monthly statement of account of the Property Account (as defined in the Cash Management Agreement)
produced by Bank (as defined in the Cash Management Agreement) during each month when the
Property Account, if any, exists pursuant to the terms of the Cash Management Agreement;
(ii) such Borrower’s respective monthly certified rent rolls for the preceding month signed
and dated by the respective Borrower, detailing the names of all tenants of the Improvements, the portion
of Improvements occupied by each tenant, the base rent and any other charges payable under each Lease
and the term of each Lease, including the expiration date, and any other information as is reasonably
required by Lender, within thirty (30) days after the end of each calendar month, provided however, upon
the transfer of the Loan in connection with a securitization, such certified rent rolls shall be quarterly
within thirty (30) days after the end of each applicable calendar quarter, provided however, upon the
transfer of the Loan in connection with a securitization, such certified rent rolls shall be quarterly within
thirty (30) days after the end of each applicable calendar quarter;