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Lending Guidelines

Lending Guidelines

 

Lending Guidelines

OneAmerica regional managers solicit mortgages through an active correspondent network. A combination application/commitment document is used to negotiate terms for new loans, allowing the borrower to see the material loan terms up front. The rate is locked when the application is signed and the borrower submits a 1% deposit. An early rate lock option is also available. Approval is generally completed within seven to 14 days of the receipt of information necessary to process the loan request. Upon approval and execution of the application by a OneAmerica affiliate, the application becomes the commitment.
 

Industrial

  • Minimum 24’ clear span
  • Dock-high loading, or combination of dock-high and surface-loading capability with levelers
  • Minimum average tenant space of 10,000-15,000 square feet
  • Optimal column spacing of 40’
  • Full drive-around capability, with adequate turning radius
  • Average lease term of three years or longer
  • Staggered lease maturities
  • No single tenant taking more than 30 percent of total space, unless investment grade tenant
  • Concrete tilt-up or concrete masonry unit is optimal
  • Maximum office build-out of 20 percent (used for underwriting rents)
  • Located in an industrial park or industrial area
  • Land/building ratio no less than 2:1
  • Concrete loading pads
  • Dock distribution along long axis of building
  • Near an interstate access ramp
  • Early suppression, fast-response sprinkler system

Retail

  • Grocery-anchored neighborhood centers
  • Freestanding retail “BBB-” or better credit, or outstanding sales and financial history
  • Well-located neighborhood centers with market-dominant, non-investment-grade anchor tenants in non-cyclical market segments
  • In-fill, unanchored retail center
  • Prefer not to finance only a portion of a center (e.g. no “carve-outs,” party walls or parking via easement)
  • Debt service coverage and expenses from credit tenant of 70 percent or more
  • Parking ratio 5/1,000 square feet
  • Center should parallel major thoroughfare; elbow and less visible space discounted
  • Prefer major metropolitan area locations
  • Outparcel development should not obstruct visibility of shop space or signage
  • Second levels and mixed-use properties considered on case-by-case basis

Office

  • Prefer newer, multi-level, class “A” projects
  • Adequate elevator capacity and fully sprinklered
  • Minimum lease terms of five years preferred, with staggered expirations
  • Net leases or fixed expense stops required
  • Parking ratio › 4/1,000 square feet
  • Located in an established “office market” or park
  • High proportion of investment-grade tenancy
  • Floor plates of 12,000 square feet or greater
  • Underwriting will include an allowance for turnover costs (e.g. tenant improvements and lease commissions)
  • ‹ 60 percent LTV on multi-tenant properties
  • ‹ 75 percent LTV on single-tenant properties with credit tenancy

Medical Office

  • Substantially owner-occupied or occupied by credit-worthy tenants on long-term leases
  • All doctor owners must guarantee the note
  • Joint and several liability preferred over pro-rata
  • Prefer newer projects with quality construction
  • Adequate elevator capacity and fully sprinklered
  • Parking ratio › 5/1,000 square feet
  • Loan amount per doctor ratio preferably $500,000 or less
  • Adjacent to or near market-dominant hospitals

Apartments

  • Low-density garden-style -- 20 units/acre or fewer preferred
  • Mix of unit types
  • One bath per bedroom
  • Pitched roofs
  • Low-maintenance exterior (e.g. masonry, cementious (“hardy board”) or vinyl siding)
  • Interior entrances
  • Desired unit features: washer/dryer, ceiling fans, vaulted ceilings, fireplaces, storage areas, patio or balcony
  • Full amenity package, including clubhouse, pool, business center, etc.
  • One parking space per bedroom
  • Prefer complexes in excess of 100 units
  • Separate metering for all utilities except water

Build-to-Suit and/or Owner-Occupied Parameters

  • Typical real estate considerations still apply
  • Minimum 10-year lease term or direct corporate obligation
  • Significant amortization over primary lease term
  • Full or partial personal liability of partners, principals or primary shareholders of owner-occupied properties when tenant is closely held
  • Loan amount must be justified by market rents
  • Building preferably adaptable to multi-tenant use
  • Land value hang-out at “prime” rates
  • Hang-out beyond leases as supported by the market

General Underwriting Positives

  • Rapid or stepped amortization schedules
  • Additional security (e.g., letter of credit)
  • Loan guarantees
  • Transactions larger than $20 million generally require significant coverage of debt service and expenses by credit tenants or leverage levels less than 60%
  • Substantial pre-leasing on forwards
  • Credit tenancy >80 percent coverage of debt service
  • Low leverage

General Underwriting Negatives

  • Within the 100-year flood plain
  • Single-story office space
  • R & D, flex- or low-ceiling warehouse space (16’ or less discouraged)
  • Under-performing property based on market averages
  • Poor access and/or visibility
  • Poorly written credit lease
  • Full loans in market with increasing vacancy and poor absorption forecast
  • Multi-tenant office transaction with leverage level >60%
  • Detailed physical description of improvements
  • Major tenant lease/lease reviews
  • Three to five years of operating history on property
  • Photos of property and surrounding area
  • Demographic profile study (population facts), including radius ring maps
  • Site plan
  • Financial statements on principals and credit tenants
  • Sales history for anchored retail
  • Rent roll
  • Disclosure of any existing or potential negative environmental condition