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Financing for commercial property can take different forms

12/1/2015 | Real Estate Blog

Real estate transactions are generally complex. Before a deal can be finalized, there are many pieces that must fall into place. One of those pieces is financing. If financing for a purchase is not secured, the transaction will not happen. Because of this it is vital that a purchaser lines up financing, and, if problems concerning that financing arise, they are promptly addressed.

While there are some rules in place regarding financing, within those boundaries there is some room for creativity. For example, funding can come from more than one source. The way in which a property group based in Pennsylvania plans to finance the purchase of an apartment complex, illustrates this.

It was recently announced the property group received a bridge loan from a lender, in the amount of $46 million. In addition, the lender, Greystone, connected the group to a joint venture equity partners. The loan—which the property group has 35 years to pay back—was a part of the lender’s Federal Housing Administration and Housing and Urban Development lending program.

The financing made it possible for the family owned and run property group to make a purchase that is worth approximately twice what it usually purchases. According to the executive vice president at Greystone, the combination of the two played an important part in the property group’s ability to purchase the apartment complex. Because matters of this nature are complex, it is likely the property group had a lawyer on its side to make sure the terms of the agreement made sense as well.