Commercial Mortgages 101: Everything You Need to Know to Create a Winning Loan Request Package

Property Description

The property description section of the loan request package is where

a lender can find a complete physical description of the land and all

of the improvements, including visual aids such as photos, site

plans, floor plans, building plans, surveys, and aerials. Unlike the

executive summary, which highlights basic property information

(e.g., address, property type, number of units, square footage [SF],

age), this section is more descriptive. Property and site details such

as lot size, site and building amenities, zoning, recent renovations,

planned renovations, construction details, anchor tenants, gross

building square feet, and net rentable square feet should all be thor-

oughly covered in this section. Gross building square feet is the size

of the building measured from the surface or face of the exterior

walls, whereas net rentable square feet is the total of all usable air-

conditioned interior space. Net rentable square feet can be found in

either the rent roll or leases. There is no right or wrong way to pre-

pare this section, but what is important is to list as much informa-

tion and to describe the property as fully as possible. Experience and

time are the best teachers as to the type and quantity of information

one should include in this section. Since there are many different

types of properties, it would be difficult to list each and every physi-

cal component of each property type, but a general rule is to think

like a buyer. A buyer would not purchase without first inspecting the

property and neither would a lender, so try to be as descriptive as pos-

sible concerning the building components. The lender may have to

foreclose on the property someday and wants to know everything

about the physical condition of the collateral, as well as the financial

condition. Following is a general list of property and site details and

visual aids commonly found in the property description section:

Preparing the Loan Request Package

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Property and Site Details

? Property name and physical address

? Property type (e.g., apartments, retail, office, self-storage

miniwarehouse)

? Number of units or total net rentable SF

? Occupancy

? Year built/year renovated, expanded, remodeled

? Number of tenants

? Average apartment unit size in SF or average tenant space

size in SF

? List of anchor tenants (e.g., the grocer anchor in a retail

shopping center)

? List of tenants occupying more than 20% of the total space

? Site/land details

Purchase price

Total SF or acreage

Shape, layout, and general dimensions

Zoning

Ingress and egress

Visibility and signage

Utilities

Easements or deed restrictions

Roads and shared driveways

Excess land

? Construction details

Configuration, design features, functional utility

Number of buildings

Building height (number of stories)

Type of roof (flat, pitched)

Foundation

Mechanical and electrical systems

Type of heating and air-conditioning systems

Public utilities

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Commercial Mortgages 101