Bridge Loans: Everything You Wanted To Know

As the name implies, bridge loans fulfill a vital need for active developers by giving life to a new project in the months before lenders feel confident enough to make available a construction loan, or a repositioning loan in the case of an existing project. But real estate bridge loans have other uses, both tactical and strategic, that make them indispensable in today's New York marketplace.

For new development projects, bridge loans provide financing for property assemblages, site acquisition, and development expenses. Not only do such loans provide the developer with the funds to acquire a site, they also supply the breathing room that the developer needs to create the architectural designs and analyses for new construction projects. Just as important, bridge loans offer an opportunity to refine the developer's property repositioning or acquisition plan in the case of an existing project.

During the development--or repositioning--planning stage, the developer's financial advisor has the time to arrange senior construction and mezzanine loan financing. For example, in recent months our firm has arranged highly competitive financing for projects under the 80/20 Bond Financing Program, and other projects under the recent Liberty Bond Program for downtown Manhattan. Still others have been condominium or office projects in which the fiercely competitive New York marketplace requires developers to move extremely rapidly to acquire control of desirable locations.

Bridge loans have other strategic uses for developers. By enabling construction to commence before a formal construction loan is in place, a developer may time construction to avoid a heavy winter schedule with the attendant extra costs, or plan the completion of construction to coincide with the primary rental and sales months beginning in the spring and continuing into the summer season.

A typical bridge loan has a term of 12 months or less, with spreads ranging upwards from 225 over 30-day LIBOR depending upon the lender's view of the location, viability of the project, and reputation and financial strength of the developer. Commitment fees of 1% are common, although lower fees can sometimes be negotiated. In some instances, commitment fees on bridge loans can be credited against fees on subsequent loans from the same lender. Guarantees required for such loans are highly negotiable.

Our firm, The Singer & Bassuk Organization, has recently arranged over $250 million in bridge loans for seven separate transactions. In each instance, these loans have enabled developers such as The Moinian Group; Nathan Berman; a joint venture consisting of Cornerstone Real Estate Advisers, a wholly owned subsidiary of Massachusetts Mutual Life Insurance Company and Adellco LLC; and a joint venture comprised of Jeffrey Levine's Douglaston Development and Continental Properties owned by the Fisch family, to acquire site control and arrange for the orderly start of construction.

I expect bridge loans to play an increasing role in New York financing and see a trend where lenders providing the ultimate financing for a project's development to provide bridge loans in order to cement the business and the relationship at an early stage in an increasingly competitive market.

Marc Sylvester is based in Edison, NJ. He holds expertise in the banking and finance sector and is a consultant to leading business houses.

http://www.imdollar.com/bridge-loans/
http://www.imdollar.com

---

What are Secured Loans?

Secured loans are one of the most popular personal loans... Read More

Lions and Loans: Why Finance Should Always be Personal

Different types of loans are available for almost every aspect... Read More

Debt Consolidation ? Watch out for Payday Loans

Most any large city has a number of small shops... Read More

What is the Difference Between an Unsecured Personal Loan and a Secured Personal Loan?

This is a common question that many consumers have. Many... Read More

What is a Home Improvement Loan?

A UK Home Improvement Loan Can Give You The Home... Read More

Cosmetic Surgery Loans ? Discovering How It Feels to Look Your Best

Market research of UK's cosmetic surgery ascertains the fact that... Read More

Business Loans from Family - A Good Idea?

Can I Ask my Family for a Loan to Pay... Read More

Loans For Unemployed - Employing Home For A Solution To Unemployment

If the statistics for the quarter ended April 2005 are... Read More

Information About Adverse Credit Homeowner Loans

While looking for adverse credit homeowner loans it can seem... Read More

PayDay Cash Advance Loans - The Benefits of Using the Payment Protection Plan

Payment protection plans are offered by payday companies to protect... Read More

Holiday Loans Can Expand The Horizon Of What You See

Why do kids get all the breaks? Winter-weary adults, fed... Read More

No Credit? ? You Will Need a Bad Credit Loan

So you have never taken out a loan? You don't... Read More

Fast Money: A Guide to Fast Secured Loans

Here is a useful guide to fast secured loans. Here... Read More

Quickest Payday Loans - Things To Look For in a Cash Advance Company For The Fastest Loan Processing

To find the quickest payday loans, you need to look... Read More

Alternative Venture Finance: Federal Grants and Loans

While most companies seeking venture capital initially think about angel... Read More

Secured Loans ? Filling the Void Created by the Deficiency of Resources

"Money is like a sixth sense without which you cannot... Read More

How To Save Money On Car Loans

Have you noticed that everyone seems to have a newer... Read More

Ways to Find a Cheap Loan

If you're in the process of trying to find a... Read More

Finding a Loan With Bad Credit

No matter what your credit history is the simple fact... Read More

Why Choose a Personal Secured Loan?

Listed below are some of the many reasons why choosing... Read More

Hidden Bank Loan Charges That Would Make a Pick-Pocket Envious

There can be more to a bank business loan than... Read More

Personal Loans for Unemployed ? Liberating You from the Tangles of Unemployment

Like most of the contingencies (the after effects of unemployment... Read More

Devising Newer Ways of Repayment

How good would it have been had there been no... Read More

Why Bank Overdrafts May Be a Bad Deal For You

Many banks actively encourage their clients with low balances to... Read More

Simple Tips On Getting Your Loan

So, you want to get a loan?Here are some simple... Read More

Cheap Loans Till Payday - Using Cash Advance Loans in an Emergency

Need extra cash till payday? It's easy to apply and... Read More

The Average Profile of Customers Opting for a Payday Loan Cash Advance

Payday loans are loans of a small amount, taken for... Read More

Instant Cash Advance Loans - Take Advantage of The Convenience of The Payday Loans Available Online

Cash advance loans not only provide you with instant cash,... Read More

Five Things To Check Out When You Apply For a Payday Loan

Are you thinking of going in for a payday loan... Read More

User Guide to Payday Loan Terminologies

Are you approaching towards a payday loan cash advance? Is... Read More

What is a Bad Credit Personal Loan?

A UK Bad Credit Personal Loan is a loan designed... Read More

How to Get a Secured Loan UK

Living in the United Kingdom, you might find yourself in... Read More

Are You In The Market For a Car Loan?

Car loans are a tempting way to purchase a new... Read More