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Real Estate
June 13 /PRNewswire/ -- Apollo Real Estate Advisors L.P.. one of the most active real estate investors in the U.S. and internationally. has announced several executive appointments. Robert Gigliotti. William McCahill and Steven Wolf have joined the firm as partners in New York. Apollo previously announced that Dean Pentikis. a partner formerly based in New York. has been appointed head of Apollo's Los Angeles office.
Gigliotti. who joined Apollo as a partner after 20 years in the real estate group at GE Asset Management. is focusing on acquisitions for Apollo's domestic opportunity and value-added funds. McCahill. a former Bank of America and Chase Manhattan Bank executive. is a partner concentrating on real estate mezzanine and other debt investments.
Wolf. a founding principal of Westside Capital Advisors LLC. is a partner overseeing Apollo's Value Enhancement Funds. and directing asset management for domestic fund and joint venture investments. He has worked with Apollo on the management of the VEF Funds during the past two years at Westside. Pentikis. now heads the firm's West Coast equity and debt investment business. He replaces Richard Ackerman. who left the firm to form an independent real estate investment and development company.
"This highly experienced and seasoned team reflects the growth of Apollo's business and the success of our funds." said Lee Neibart. Apollo senior partner. "We've raised about $1.5 billion in capital in the U.S. for new investments across several of our funds - opportunity. value-added and mezzanine."
Previously. Gigliotti was managing director in the real estate group of GE Asset Management. a position he held from 1988. He was responsible for the eastern U.S. and Europe. overseeing a portfolio of properties now worth more than $1 billion. Prior to joining GE Asset Management in 1986. he held positions with GE's silicone. turbine and capacitator products divisions. He joined the company in 1978 as a financial analyst. Gigliotti earned an M.B.A. and a B.S. in finance from the University of Connecticut.
Most recently. McCahill was a real estate consultant in New York City advising clients on real estate finance. From 1993 until 2005. he was an executive vice president and senior lending officer at Bank of America and its predecessor Fleet Bank. responsible for a $12 billion real estate loan portfolio. McCahill spent the previous 18 years at Chase Manhattan Bank. where he was senior vice president and New York regional executive managing real estate lending operations. He earned a master's degree in business administration from Fordham University and a bachelor's degree in marketing from the University of Notre Dame.
Prior to founding Westside Capital Advisors in 2003. Wolf held the position of director at Credit Suisse First Boston. Previously. he served as managing director and head of acquisitions for Northeast investments at Federal Realty Investment Trust. From 1990 to 1997. he was senior vice president at Equitable Real Estate Investment Management Inc.. now part of Morgan Stanley. A graduate of Boston University. Wolf received his M.S. degree from New York University.
Before joining Apollo. Pentikis was an executive in the real estate group at Nomura Securities. where he was responsible for structuring and underwriting debt financing. Previously. he was a consultant with Deloitte & Touche Real Estate. focusing on debt and equity analysis. Pentikis began his career in the real estate finance area of the Bank of New York. He graduated with a B.S. in economics from James Madison University.
Apollo Real Estate Advisors is one of the most active and prominent real estate investors in the U.S. and internationally. Apollo specializes in acquiring undermanaged and distressed properties and developing properties in major urban areas throughout the U.S. and Europe. Since Apollo's founding in 1993. the firm has overseen the investment of eight real estate funds totaling more than $5 billion in equity. The firm's Web site is apollorealestate.
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Real Estate
a partner in the firm Rothgerber Johnson & Lyons LLP. was appointed to the Denver Urban Renewal Authority board of commissioners by Mayor John Hickenlooper and confirmed by the Denver City Council. Roberta's Chocolates of Colorado has won the Best Candies & Chocolates award at the first "Best of Denver Say it With Chocolate" competition. . . . Steve Turner. head brewer of the Westminster location of Big Horn Brewing Co.. was awarded a bronze medal at the World Beer Cup. held in conjunction with the Craft Brewers Conference in Seattle. The Alice P. Brownie English Style Brown Ale. which also won a silver medal at the 2005 Great American Beer Festival. was awarded. . . . Regis University's School for Professional Studies created a new position for Marcel Dumestre. SPS academic dean and professor of Ignatian mission and values. Dumestre will oversee the deans of undergraduate. graduate and teacher education programs.
. . . Aspire Beyond. a Wheat Ridge nonprofit that provides community day activities for adults with developmental disabilities. was named Business Partner of the Year by Volunteer Connection of Jefferson County.
Real Estate
W.Va. -- Answering allegations from a conservative group that have spawned a federal investigation. U.S. Rep. Alan Mollohan asked the House Clerk's office on Tuesday to correct or amend 19 items on his financial disclosure reports dating back to 2000. But the West Virginia Democrat said the "relative handful of unintentional and immaterial mistakes" fail to amount to the more than 250 "misrepresentations and omissions" the National Legal and Policy Center alleged he had made in his reports. The 12-term congressman also released several documents to rebut those allegations. including a statement from one of his accountants explaining the jump in personal worth seized upon by the group in its allegations against him. The firm of Braund Eiler & Vasko has done accounting for Remington LLC. which owns rental units in Washington. called The Remington. Remington LLC has Mollohan. his wife and another couple as its shareholders. The Allison Park. Pa.-based firm said shares in Remington have greatly increased with skyrocketing real estate values. "When the underlying asset of that stock investment is real estate. and when that real estate is located in a market that is experiencing rapidly escalating values. it really doesn't take much appreciation in a single unit to greatly affect the value of a block of units." Managing Partner Blair Eiler wrote in the May 9 letter to Mollohan. Mollohan also released his disclosure report for 2005. which said the value of his assets increased by at least $1.6 million over the prior year to a minimum of $7.9 million. His non-congressional income.012. Real estate holdings in Canaan Valley and North Carolina account for the increases. "The documents prove that the National Legal and Policy Center (NLPC) has wildly exaggerated the inadvertent errors on my past financial disclosure statements." Mollohan said in a release. "They also show that NLPC is dead wrong in implying that I have improperly benefited from my office." The group filed a 500-page complaint against Mollohan with federal prosecutors in April. but has declined to release that report to The Associated Press. Group Chairman Ken Boehm questioned whether a booming real estate market can explain why Mollohan's assets grew by a minimum of $6.1 million between 2000 and 2004. Boehm called Mollohan's disclosures on Tuesday a "quasi-validation" of the allegations. "These are not isolated. inadvertent mistakes." Boehm said. "He has not begun to address all of the problems." Four of the changes to Mollohan's reports reflect incorrect dates for financial transactions. Another four correct income from Remington to Mollohan and his wife that had been underreported by a total of $30.820 in 2002. The amendments also add that Mollohan borrowed $2.3 million from the United Bank in Virginia in 1999 to refinance loans relating to The Remington. But Mollohan said such loans are normally exempted from disclosure. citing advice he received on the topic at the time from counsel to the House ethics committee. "I also note that the net effect of reporting the loan (a liability) and the note receivable (an asset) is zero." Mollohan wrote. Mollohan further stated that he started reporting a 2003 refinancing of those loans when he and his partners withdrew more than $1.5 million as part of that deal. Besides Mollohan's assets. Boehm's group has targeted the federal appropriations he has secured for nonprofits in his district. The FBI has subpoenaed records from at least some of those nonprofits since Boehm's group filed its complaint in April. Facing re-election this year. Mollohan was pressed by House Democratic leaders later that month into stepping down as the ranking minority member of the House ethics committee. He is also on the House Appropriations Committee. and is a ranking member of one of its funding subcommittees. Get home delivery of the Daily Press for less than $3.33 a week.
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Real Estate
wait until you gear up to buy the second. It doesn't matter whether it is a buyers' market or a sellers' market a homeowner who needs to relocate or wants to "trade up" is never in the catbird seat. Why? Because he has realized the American dream. he owns a house. And so the huge question looms: does one buy the new house first? Or sell the old one?
A first time homeowner does not have this problem. Maybe there is an apartment lease to consider or timing issues involving kids and school. but first time buyers are relatively footloose and fancy free. Not so the second-or third-time buyer. There is the matter of an existing house. ongoing mortgage payments. and the cash needed for the down payment needed to close on the new house. You have the money of course. there is real equity in your current home. but until that home is sold that cash is locked up securely in your current mortgage bank's vault. So. what we have is a conundrum. What comes first. the chicken or the egg? particularly in a sellers market. risk becoming homeless. moving in with the in-laws while furniture. and the files requested yesterday by that nice IRS auditor languish on a pallet deep in the climate controlled. fireproof walls of a moving and storage company. Or. in a buyers market. one finds the perfect house and is unable to make an offer because that less than perfect house you already own has a mortgage payment due next week and there is no way anyone is going to take it off your hands the way the furnace is acting. How long might it take to find a buyer and actually close on the sale? If the market is tough enough. maybe the owner of your next house will be willing to work with you. If the market is strong enough. maybe selling your existing home is only a weekend away. But who knows? And how courageous must you be to bet the ranch on either scenario? When I was a real estate agent. I worked with a lot of customers who froze in place because of the buy first or sell first decision. In one memorable case. Karen was frantic to move to a town with a better school system but David was terrified that they might have to move twice and that the intervening accommodations might lack the comforts of his existing home. They did make offers on two homes which did not come close to being accepted. not because there was anything wrong with the price. just with David's insistence on a contingency allowing them to first sell their home in a rather unappealing town. Since there were other competitive offers without such restrictions. they never got a second glance. I gave up on them after four years and some 125 house showings. They passed on some real gems. and as far as I know they are still looking. I do know that they had invested close to $20.000 in private school tuition for two of their three kids by the time I bid them goodbye. What should they have done? There are options. Granted. none of them are ideal. but would you rather spend the rest of your life in that two bedroom one bath condo with your husband and four kids? I didn't think so.
Do your homework. This is the same drill you went through when you bought your first house. Get pre-approved for a mortgage. line up a hardworking and responsive real estate agent to help you find the new house and. if geographically appropriate. to list your current home.
Get your house ready to sell. Clean out the closets. paint the front door. and fix the furnace if it needs it. Talk with a real estate agent. get an approximate listing price and discuss timing the listing. how long might a sale really take at each of several price points.
Pick your poison. As stated above. none of your options are perfect. but is your financial and emotional situation better able to handle owning two houses for a (hopefully) brief period. or moving into short term housing should your old house sell before you are able to locate and secure a new one.
If you opt for the possibility of owning two homes. get your financial situation in order. Look into a bridge loan (which will give you the funds for the new down payment and maybe even enough to subsidize a second mortgage for a while) or arrange for a home equity loan. A bridge loan might cost a little money for an origination fee and an appraisal. but you will not owe any payments or interest unless you close on the loan. and you will not do that until you actually purchase your new house. Home equity loans are like a big MasterCard (and equally dangerous if you are not disciplined in their use) but banks are eager to grant them and most are financed at the lender's expense. Again. there are no fees until you actually draw down the funds. However. you must put that loan in place before listing your house. The bank will send out an appraiser and he will probably notice and report the Century 21 sign on your front lawn. You need also to be honest with the bank financing your new mortgage. It may be very nervous at the prospect of your carrying two mortgages and maybe a bridge loan as well. Find out what its lending requirements will be in such a situation. That may well automatically eliminate the "buy first" option.
Be creative. I generally discourage unusual contingencies in listing contracts or offers to buy. but no rule is hard and fast. If you are caught up in a market where houses are selling in a heartbeat. making an offer to buy contingent on selling your own home just won't fly. However. you could insert a provision in the listing contract making the sale of your existing home dependent on reasonable time to locate and arrange the purchase of the new one. First time buyers are flexible and might actually appreciate extra time to give notice and avoid a penalty on their lease or even sock away more money toward the purchase. Maybe another homeowner will appreciate the leeway to resolve their own chicken and egg situation.
is seldom in equilibrium - when there is a balance between the number of active buyers and the number of homes available to them - you are probably going to encounter the chicken and egg decision any time you want to buy or sell. Just don't freeze (or sit on the nest). Recognize the situation. evaluate your options and get moving in one direction or the other.
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Real Estate
BOSTON--The Boston office of CBRE | Melody. the real estate investment banking division of CB Richard Ellis. arranged $58 million in acquisition financing for a seven-building.697-square-foot office portfolio in suburban Boston.
Frank Petz. senior director of CBRE | Melody's Boston office. secured the senior loan financing for the property's new owner/developer. a joint venture between Mack-Cali Realty Corp.. a JP Morgan fund and Gale International. one of the world's largest real estate developers headquartered in New Jersey and with offices in Boston. JP Morgan Chase & Co. (NYSE: JPM). is a New York City-based leading global financial services firm with assets of $1.2 trillion and operations in more than 50 countries. Mack-Cali is a Florham Park. NJ-based real estate firm that recently agreed to acquire Gale.
Three of the buildings are located in Andover. two are in Billerica. at 3 and 8 Federal St. Six of the buildings.697 were sold by William Callahan. a Bedford-based developer. The seventh building was sold by Berwind Properties.
The venture entity. which plans to invest about $20 million in improvements (capital expenditures. tenant improvements and leasing commissions) into the buildings. lease and provide construction services for the portfolio.
'We worked very closely with the joint venture of Gale. JP Morgan and Mack-Cali to find the most flexible and competitive financing for the acquisition of this office portfolio. which
'Our client was very happy with the final outcome. a high leverage bridge loan that was structured to include additional capital for tenant improvements. leasing commissions and capital costs.'
Real Estate
SINGAPORE: A joint venture by Lippo Group and Usaha Tegas Sdn is seeking a S$600 million (RM1.38 billion) loan to pay for a 55 per cent stake it bought in Overseas Union Enterprise Ltd. a banker involved in the deal said.
The joint venture. which had its name changed to OUE Realty Pte from Lippo Property Investment Pte. is 60 per cent owned by Indonesia's Lippo Group. the banker said.
Lippo owns Indonesia's biggest publicly traded real-estate company PT Lippo Karawaci. while Usaha Tegas owns Malaysia's largest mobile-phone company Maxis Communications Bhd.
Raiffeisen Zentralbank Oesterreich AG was hired as the arranger and is marketing the loan to other banks. offering them an all-in pricing. which include interests and fees. of 0.11 percentage point for the one-year portion and 0.12 percentage point for the two-year portion. the banker said.
Lippo and Usaha are buying property company Overseas Union to benefit from a rally in the region's real-estate markets. led by Hong Kong and Singapore.
According to Chicago- based real-estate broker Jones Lang LaSalle Inc. office rents in the first three months of 2006 rose 44.3 per cent from a year ago for the same period in Hong Kong.
Office rents in Singapore grew 35.6 per cent in the first quarter of 2006 from a year ago for the same period. Singapore's second-largest bank United Overseas Bank Ltd sold the 55 per cent stake in Overseas Union for S$989.9 million (RM2.27 billion).
OUE Realty is making a mandatory cash offer for the rest of the shares it doesn't own in Overseas Union at S$10.20 each. Lippo's adviser for the purchase BNP Paribas Peregrine (Singapore) Ltd said in a statement on May 27.
The purchaser "intends to use OUE as a platform to develop its interests in the property and hotel sectors in Singapore. and to further expand its interests in these sectors in Asia. including in countries such as Hong Kong and China." BNP Paribas said in a statement. - Bloomberg
Real Estate
CFC)- Bahrain Commercial Facilities Company (BCFC) continues to focus and develop its consumer finance business in the past few years with the increasing competition in the market. However. the latest developments in the consumer finance market have helped the company the most in this industry. Most of the competitors seems to have lost business while abiding by the new regulations laid by BMA. this is not the case when we look at BCFC. This is attributed to the fact that the company was already following these regulations as it has stricter policies in lending to the consumer finance. The successful implementation of the BMA rules have allowed the company to bring in BD53mn in the form of new business (new loans) for the year 2005. which is also far better looking at the consumer finance market. BCFC continued to focus on its target customers i.e. Bahraini citizens to drive its business growth. BCFC's client base increased to about 17. due to continued high customer retention rate owed to better lending terms coupled with fast loan processing.
Keeping in line with the improved performance of BCFC and our expectations about its future potential. we have valued BCFC's share price at 677fils. The stock currently trades at around 700fils. which implies that the value arrived at by using the DDM model is around 3.3% lower than the current market price. Hence. we recommend a 'HOLD' on the stock with a medium term perspective.
BCFC has continued to build one of the highest quality credit portfolios among its peers in the Bahraini market over the years. The company is well focussed on Bahraini nationals as its target market and has continued to lead the consumer finance business in the country by serving around 17.000 customers at the end of 2005. Notwithstanding its strict lending policies BCFC has been able to increase its total outstanding customers from
2005. The company has been diversifying its revenue stream over the years to maintain the core business. which is the consumer finance segment around the 40%-50% mark of the total revenue. which is also the target for the company. In doing so the company has increased its emphasis on the other three segments. which are automotive sales. real estate and the insurance.
In the year 2005. the consumer finance or the parent company accounted for 46.2% of the total revenue. where as the other three segments collectively accounted for 53.8%. The average exposure per customer. based on the value of originated loans is around BD5.853 with one of the highest maturity period of 7 years. The quality of the portfolio continued to benefit from the sound underwriting standards and efficient collections and recovery functions enforced by the company. The non-performing loans of the company increased from BD2.25mn in 2004 to BD3.05mn in 2005. Though the NPLs of the company increased in 2005. we don't see it as a major concern in the medium term. As a percentage of total loans portfolio. NPLs stood at 3.06% in 2005 as compared to 2.41% in
The cost of borrowing is one of the major determinant of profitability for its consumer lending business since around 68% of its assets are financed through bank debts and bonds. Having conservative credit policies in addition to a long track record of consistently good performance. the company's bargaining power with the commercial banks has increased over the years as it is able to borrow at highly competitive interest rates compared to its competitors. However. the inability to raise customer deposits puts BCFC at a disadvantage compared to the commercial banks. who enjoy the benefit of low cost funding.
The policy of the company is to finance its consistent balance sheet growth via diverse funding sources whose maturities are well spread out to mitigate the impact of liquidity risk. Around 58.7% of the asset base in 2005 was funded through a mix of term loans. bonds and bank overdrafts. The term loan of the company declined by 6.1% as compared to 2004 to BD56.67mn in 2005.
a bond maturing in 2006. The company has a mix of both fixed and floating rates in lending to the customer. but the entire funding by the company is based on floating rates. In order to mitigate the interest rate risk. the company has entered into interest rate swaps and caps.
BCFC's earnings in the first quarter of 2006 improved by 12.88% to BD1.67mn as compared to BD1.48mn recorded during the same period last year. The earnings per share of the company stood at 15.4fils for the first quarter ended March 2006. The consumer finance business of the group made steady progress as the interest income of the group improved by 9.1% to BD2.60mn. while the rising interest rates caused interest expense to jump by 24.4% to BD0.99mn. despite hedging the interest rates. The parent company reported a decline of 5.7% in its bottom-line to BD1.09mn as compared to BD1.16mn during Q1-2005.
The automotive business of the company continued to show impressive performance during the first quarter of 2006. an increase of 68.7%. Tas'heelat Insurance Services Company has shown continued growth over the last few years.
The company reported a revenue of BD0.13mn compared to BD0.12mn in the first quarter of 2005 while its bottom-line surged by 21.9% to BD0.089mn. The real estate business of the company failed to contribute to the Group's bottom-line. The turnover of Tas'heelat real estate dropped by 64.3% to BD0.015mn as compared to BD0.042mn in the same period previous year. It reported a loss of BD0.027mn during the period. which is higher than the loss reported during the same period last year.
The total assets of the company stood at BD129.54mn at the end of Q1-2006. representing an increase of 3.3% over the end of 2005. The increase in the asset was mainly from the loan and trade receivable. which grew by 7.0%. Inventories mainly comprising of automotive stock and land held for resale declined by 19.8% to BD11.67mn as compared to BD14.54 at the end of 2005. The decline was mainly in the automotive stock. while the land held for resale remained at the level of 2005.
is mainly driven by public spending. Robust government spending. prompted by exceptionally strong oil revenue. will stimulate private consumption and will help to bolster business confidence. The continued government support to the economic reforms has resulted in the improvement in various sectors of the economy. However. the prevailing high oil prices will play a much bigger role in pushing the economy to a high growth trajectory in the coming years.
over the years and plays a significant role in driving the industry. It has maintained a healthy market share in the market over the years despite the intense competition faced by the commercial banks. Although. the consumer credit market has shown positive growth during the last few years. it still has huge potential to grow in the medium term. However. the sharp spike in interest rates in future might prove to be a dampener. in addition to the small size of the consumer finance market in
. The management is exploring regional expansions and further diversification of business into complementary areas. However. these will take a while to materialize as the company is expected to be cautious and will look for the right kind of opportunity in the region.
The escalation of the real estate prices in recent months may not give substantial appreciation on its real estate portfolio. The contribution from brokerage and commission activities is expected to be significant. going forward. Inventory of land at the end 2005 and the real estate services will continue to show positive earnings. although it should be noted that the profits from this the real estate segment in 2006 will not be as seen in the year 2005.
Historical P/E & P/BV multiples pertain to respective year-end prices. while those for future years are based on market price in the Bahrain Stock Exchange as on June 5. 2006.
Keeping in line with the improved performance of BCFC and our expectations about its future potential. we have valued BCFC's share price at 677fils. The stock currently trades at around 700fils. which implies that the value arrived at by using the DDM model is around 3.3% lower than the current market price. Hence.
Real Estate
Doha Bank has signed a Memorandum of Understanding (MoU) with Damac Investments and Properties LLC. for financing the purchase of residential properties.
Under the arrangement. Doha Bank will extend home loan for purchase of Plazza residential properties of the Damac properties at the Fox Hill district of Lussail. Qatar. R Seetharaman. Deputy Chief Executive Officer of Doha Bank and Peter R Riddoch. Chief Executive Officer of Damac Investments and Properties LLC have signed the MoU on June 12 here.
Peter R Riddoch said in a press statement:"Damac is very happy to associate with Doha Bank which is recognised as a premier financial institution in the region. With this association we will able to provide the best deal to the customers".
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June 12 /CNW/ - Lanesborough Real Estate Investment Trust ("LREIT") (TSX Venture: LRT.UN) announced today that it has completed the previously announced acquisition of Elgin Lodge Retirement Home. a 64-suite retirement home located on Mary Street in Port Elgin. Ontario. LREIT has retained Kingsway Arms Management Services Inc. ("Kingsway") to manage the property for a ten-year term. The purchase price of $8.3 Million. subject to the usual closing adjustments. was financed entirely in cash on an interim basis. LREIT has obtained a commitment for a first mortgage loan in the amount of $5.9 Million. which will bear interest at a rate of prime plus 1% and be payable interest only. Kingsway has guaranteed a 12% return on the equity component of LREIT's investment for a five-year period. LREIT also announced today that it has completed the previously announced acquisition of Chateau St. Michaels. a 93-suite senior housing complex located on 7th Avenue S.E. in Moose Jaw. Saskatchewan. LREIT has retained Integrated Life Care Inc. to manage the property for a five-year term. The purchase price of $7.6 Million. subject to the usual closing adjustments. was financed by the assumption of a new first mortgage loan in the approximate amount of $5 Million and the balance in cash. The first mortgage loan bears interest at a rate of 5.673%. has monthly principal and interest payments of $31.237 and matures in March 2011. LREIT is in the process of finalizing the terms of an additional $500.000 advance on the first mortgage loan. LREIT is a real estate investment trust. which is listed on the TSX Venture Exchange under the symbol "LRT.UN". The objective of LREIT is to provide Unitholders with stable cash distributions from investment in a geographically diversified Canadian portfolio of quality real estate properties. For further information on LREIT. please visit our website at lreit. This press release contains certain statements that could be considered as forward-looking information. The forward-looking information is subject to certain risks and uncertainties. which could result in actual results differing materially from the forward-looking statements. The TSX Venture Exchange has not reviewed or approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release.
For further information: Arni Thorsteinson. Chief Executive Officer. or Gino Romagnoli. Investor Relations.
Real Estate
Scott Clark is a business consultant and columnist based in Cedar Rapids. Iowa. You can send The Company Doctor questions or comments by email at sclark@bizjournals. You can also visit the Company Doctor's web site.
Has a projected future cash crunch for your business started you thinking about another bank loan? Before you decide. consider this: banks offer far more than one or two types of business loans.
Here is a non-exhaustive list of fourteen different types of bank business loans. To take advantage of the best financing option for your business. you need to know what is available.
These are the most popular business loans. They usually have a maximum term of one-year; however. the bank may agree to extend them for several years. The bank will require collateral as a secondary source of repayment. and the lender must believe that the growth of the business will generate funds for repayment. Here are six different types of short-term loans:
1. Short-Term Operating Loan (also referred to as a commercial loan). This is a three to six month general business loan with a lump sum repayment due at the end of the term. If the due date approaches and current conditions make full repayment difficult. ask for an extension. However. you will still be required to pay off the accumulated interest.
2. Line of Credit. This is a "pre-approved" loan (up to 24 months) with the bank setting a maximum credit line and giving the company a time limit to draw against it. You may be required to pay an up-front commitment fee of up to one percent of the credit line.
3. Inventory Loan. This is a six to nine month loan used to finance seasonal inventories and is usually reserved for established profitable businesses. Repayment is made in installments as the inventory is sold.
5. Factoring. This type of loan is used when the business cannot qualify for accounts receivable financing. The business sells its receivables to a factoring institution (called a Factor) and receives discounted funds immediately. The Factor assumes the credit risks and collection responsibilities. with end customers making payment to a P.O. Box held by the Factor. The factor will refuse any invoices it considers to be high risk. and the cost of this type of loan is very high.
6. Letter of Credit (or LOC). This is not a true loan but rather a guarantee of payment by the bank if you fail to do so. When a vendor won't ship inventory on open account and you can't afford to pre-pay. ask if your supplier will accept a bank letter of credit (or LOC). The bank will charge you a fee of at least one percent of the amount guaranteed by the LOC and will want as much documentation as it does for a business loan.
These are usually for a period of one to five years and are utilized to finance plant expansion and equipment. For these loans. banks are very concerned about collateral and will probably require additional collateral from companies with perceived risk. Here are three different types of medium-term loans:
2. Monthly Payment Business Loan. This is variation of the term loan structured with monthly payments. You may be able to negotiate lower payments for the first two years.
3. Equipment Lease. The lease is for a period of two to five years. Larger banks may have their own leasing arm. while smaller banks often have equipment leasing company affiliations. Leasing a piece of equipment means a lower monthly payment when compared to a term loan. However. the lessor retains title to the equipment at the end of the lease.
These are usually for a period of five years or more and are the hardest type of loan to secure. They are typically made to established companies (and some early-stage companies with strong collateral) for property acquisition or major expansion. Here are five types of long-term loans:
1. Commercial and Industrial Mortgages. These loans are usually written for five to ten years but may be for as long as 25 years. They are used when buying buildings and property. with the bank usually loaning up to 75 percent of the property value. Payment terms vary widely. depending on the amount of the loan and the perceived risk.
3. Personal Loan. Bankers believe your personal assets should provide much of the financing for major expansions or acquisitions. so consider a personal loan as part of your long-term financing plans. You personally borrow from the bank and turn over the proceeds to the company as a "subordinated loan." which is repayable only after all other company debt is discharged. Or you may choose to invest the funds as equity. in which case the net worth of the company is increased. In either case. your balance sheet will appear more attractive to your banker.
4. Asset Based Loan or Leveraged Buyout (known as an LBO). This loan is used by established companies with sufficient cash flow to service the additional debt. LBOs are typically orchestrated by major brokerage houses or LBO specialists.
5. Start-Up Loan. This loan is the only bank financing alternative for a start-up company with little collateral. The bank will expect to see your own money in the deal. and will probably require a loan guarantee from the Small Business Administration.
Now Hiring - Genworth Financial The breath of products and services we offer helps meet the needs of families throughout the different shapes of their lives.
? 2006 American City Business Journals. cached or otherwise used. except with the prior written permission of bizjournals.
Real Estate
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