Alyssa Salerno, Author at Century Health & Housing Capital

By: Daniel Jacques

Refinancing a commercial mortgage loan can be a strategic move to lower your interest rates, adjust your repayment terms, refinance a maturing loan, or access additional cash for capital improvements, or purely as a cash-out strategy. Successful refinancing requires careful planning and preparation. Here are the essential steps you should take now to position yourself to successfully refinance your commercial mortgage loan.

1. Evaluate Your Current Loan Terms and Financial Position

Start by thoroughly reviewing the terms of your existing loan. Understand your current interest rate, remaining balance, and repayment schedule including maturity date. This will give you a clear picture of where you stand and what you hope to achieve through refinancing.

Next, assess your financial health. Lenders will scrutinize your financial statements, including your income, expenses, cash flow, and debt levels. Ensure your financial records are up-to-date, accurate, and well organized. Pay special attention to your debt service coverage ratio (DSCR), which measures your ability to cover debt payments. A higher DSCR can improve your chances of securing favorable refinancing terms.

2. Research the Market and Potential Lenders

Understanding the current lending environment is crucial when preparing to refinance. Research market trends, interest rates, and the types of loans available. Different lenders offer varying terms, so it is important to shop around and compare options.

Consider both traditional banks as well as non-bank lenders, such as Century Health & Housing Capital. LLC. Some lenders may specialize in certain industries or loan types, which could work to your advantage and provide for a better overall experience. Century, for example, specializes in multifamily housing and we offer distinct advantages over other lenders in the arena due to our deep industry expertise and counterparty relationships.

3. Gather and Organize Documentation

Lenders will require extensive documentation to prepare a loan sizing analysis. Start gathering essential documents now to avoid delays later. Typical documents include:

Financial Statements: Income statements, balance sheets, and cash flow statements for the past two to three years and trailing twelve months.
Current Rent Roll
Debt Schedule: A detailed list of all current debts, including loan amounts, interest rates, and payment schedules.
Property Appraisal: If you are refinancing a loan secured by real estate, you may need a recent property appraisal.
Information on any special use restriction or tax abatements/PILOT’s.

Business Plan: An updated business plan that outlines your goals, strategies, and financial projections. Having your goals in mind will help as you evaluate the financing options that are available and will assist lenders as they discuss with you the various financing alternatives that best meet your needs and desires.

4. Consult with Financial and Legal Advisors

Refinancing a commercial mortgage loan is a significant financial decision that can impact your business for years to come. Before moving forward, consult with financial and legal advisors who can provide expert guidance. They can help you understand the implications of refinancing, review loan offers, and ensure that you are making the best decision for your business.

5. Consider Timing and Market Conditions

The timing of your refinancing can influence the terms you receive. Monitor interest rates and economic conditions to determine the optimal time to refinance. Whether rates are expected to rise or fall, you want to be prepared to act quickly to lock in the most favorable terms.

Refinancing a commercial loan can provide your business with financial flexibility and long-term savings. By taking these preparatory steps, you will be better positioned to secure favorable terms and achieve your financial goals. Start planning now to ensure a smooth and successful refinancing process.

As you are considering refinancing, contact Century to discuss our lending solutions. We can share options that provide favorable benefits and outcomes.

As first seen in the Albany Business Review on Feb 7, 2024.

By Chelsea Diana – Reporter, Albany Business Review

Kyle Perry has taken to calling the 30-year-old company he runs today — Century Health & Housing Capital — a startup.

The business was started in 1992 by his father with a mission to provide Federal Housing Administration-insured financing to multifamily developers and health care owners. Perry joined in 2002 and took over as president in 2016.

While Century doesn’t fit the definition of how we recognize startup businesses today, Perry said he saw an opportunity to grow the business in a way that’s more like a startup.

“I’ve always been intrigued by entrepreneurship. I wasn’t going to abandon Century to start something just to fuel my interest,” Perry said. “Taking that entrepreneurship, that desire for it, and doing it within Century and building this startup to hopefully be a name that you’re going to recognize. That’s the goal.”

Century has taken on a partner with more capital — Velocity Financial Inc. acquired a majority stake in the company in 2021. It’s allowed Century to hire more employees, both locally and across the country, and grow its pipeline to over $1 billion in active conversations.

The next goal is to bring in more business by convincing a larger share of owners and developers to explore a different option for long-term financing.

Tell me about what Century does and who your clients are. We’re mortgage bankers focusing on multifamily housing and health care, such as assisted living. We are direct lenders. So we actually finance the projects, whether it’s ground-up construction or refinancing. What makes Century unique is that our loans are all insured by the federal government. We are what they call an FHA-approved lender, or HUD-approved lender. We also service our loans. So by servicing our loans, it allows us to maintain that relationship with our clients well beyond closing.

It took a bit of convincing for you to join the business. My father founded Century in 1992, I joined in 2002. He called me and said, “We’re really busy and I could really use your help.” I had gone to business school. I was working in the private equity industry in Boston. Having grown up in this area and having left, the last thing I ever thought I would do is come back. It’s the best decision I ever made. It was always a very small boutique shop of five people. We liked it that way. Our geographic footprint in terms of our client base was almost entirely New York state.

What’s the size of the company today? We’re at 19 employees, we’ve almost quadrupled in size in only 18 months or so. A couple years ago, I knew we had these regulatory approvals and I knew that we could be bigger than we were. I was excited about the concept of growing the firm. One of my personal goals is to develop Century into a national, recognized name.

What moves are you making to reach that goal? It was going to be difficult for little Century and little me to be able to do that on my own. We partnered with a publicly traded firm, Velocity Financial, out of Los Angeles. They specialize in mortgage banking on a smaller scale – one to four units — where we are five units and up. Our average loan size could be on the small side, $5 million, but upwards of $50, $75, $100 million dollars.

We complement each other. For example, we were too small to have an in-house CFO, too small to have an HR department, too small to have an accounting department. I wore all those hats. My father wore them before me. In order to grow a firm, you can’t wear all those hats. So right off the bat, they were able to allow us to focus more on the growth side.

Have you made new hires toward that mission? One of my first hires was Dan Jacques out of KeyBank as our chief operating officer and managing director. Dan brings a ton of experience on the banking side. He was with KeyBank for more than 20 years. He grew teams of people in the corporate world. I have no experience growing teams, I’ve only had to answer to myself and my father and we were partners.

We’ve also hired the former head of Wells Fargo’s HUD platform, Cathy Pharis — she’s a legend. Cathy brings with her a ton of HUD experience. She’s out of Cleveland and we were able to hire some others out of Boston, St. Louis, Chicago and Arizona.

Why would a developer look at Century for a loan over a traditional bank? There have been misunderstandings about the HUD product. People hear government, and they think, “Red tape, I don’t want to go there.” And a lot of folks assumed HUD only did business on affordable housing. For multifamily, it’s both market rate and affordable. We’re having the conversations and hearing some of the developers did not think that HUD was an option. There is no product out there that can compete with the HUD terms. Our job is to get you into the HUD program. And once you’re in the HUD program, there are benefits that you get for future business that you don’t get if you’re not in the HUD program.

Banks right now are on the sidelines. Their terms are not great. Unless you are the best developer with the deepest pockets, with the best relationships, you’re not getting the terms that you were getting a couple years ago. HUD doesn’t change.

How’s your outlook for this year? I believe that rates are going to come down. How much? I don’t know. The good news is I think our borrowers are starting to feel either desensitized to the rise in interest rates and realizing that the world has to go on. We’ve been through enough of these cycles. They know now’s the time to start planning because I think in six months or 12 months rates will be lower and we can make a project work.

Interview has been edited and condensed.

Author: Alyssa Salerno

5 Steps to Take Now to Prepare for Refinancing Your Commercial Loan