Stretch Loans Helping Buoy Stalled CMBS Market

Law360, New York (June 9, 2016, 5:00 PM EDT) -- As prerecession commercial mortgage-backed securities are coming due, many borrowers can’t refinance in one chunk and some are turning to so-called stretch loans that include multiple types of capital, but such loan structures, often put together by private equity firms, are tricky because they require cooperation between bank and mezzanine lenders.

Lawyers say combining mezzanine and bank debt allows borrowers to get to the high loan-to-value, or LTV, ratios they obtained before the downturn, and that doing so is beneficial to the mezzanine lenders, who can charge a premium interest rate on that portion of the loan.

“It’s partly because of...

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