CMBS / Conduit Loans

One-line summary: Long-term, fixed-rate, non-recourse financing for stabilized multifamily properties, with loans pooled into commercial mortgage-backed securities and sold to bond investors.

Best for

Owners of stabilized multifamily properties who want maximum proceeds and the lowest long-term fixed rates, are comfortable with strict loan structure post-close, and plan to hold the property for the full 10-year term. Particularly competitive on larger deals ($5M+) where the CMBS execution can outprice agency.

Key terms (typical)

Attribute	Typical Range
Eligible properties	Stabilized multifamily 5+ units (broader on other property types)
Loan amount	$2 million minimum; no upper limit
Loan-to-value (LTV)	Up to 75%
Debt service coverage (DSCR)	1.25x minimum
Term	10 years standard (5 and 7 sometimes available)
Amortization	30 years (interest-only periods often available)
Rate type	Fixed for the full term
Recourse	Non-recourse with standard carve-outs
Prepayment	Defeasance or yield maintenance, restrictive

Why borrowers choose this program

• Maximum proceeds. CMBS will often lend more than agency on the same property because of more aggressive underwriting on rent growth and expense ratios.
• Long-term fixed rate. Ten years of fixed-rate certainty, with the option of interest-only periods early in the term to enhance cash flow.
• Available on properties agency won’t finance. CMBS finances mixed-use, larger commercial components, and properties that exceed agency size limits.

Considerations

• Defeasance prepayment. CMBS loans typically prepay through defeasance, purchasing Treasury securities that replicate the loan’s remaining payments. It’s expensive and complex. Plan to hold for the full term.
• Strict post-close structure. Lockboxes, reserves, and cash management can be required. Property management decisions, lease approvals, and capital plans are constrained by the loan documents.
• Servicer is not the lender. Once the loan is securitized, your day-to-day contact is a special servicer, not the original lender. This can make modifications and waivers slower than with a relationship lender.