Overview and Benefits of CMBS Loans in Miami, FL

Two of the most significant benefits of CMBS loans in Miami, FL, are:

1. Non-Recourse Financing: CMBS loans are non-recourse, meaning there are no personal guarantees required. This means that in the event of default or foreclosure, the borrower is not personally liable for repaying the loan balance beyond the property value.

2. Unrestricted Cash-Out Refinances: CMBS loans offer the flexibility of unrestricted cash-out on refinances. This allows borrowers to access excess loan proceeds when the new loan amount exceeds the existing loan balance. For example, if a $10 million shopping center is refinanced with a 75% loan-to-value CMBS loan ($7.5 million) and the original loan balance is $5 million, the borrower can receive the $2.5 million difference without any restrictions on how the funds are used. This is a unique advantage, as many commercial lenders do not allow for such unrestricted cash-out.

Non-Recourse Protection

Unlike traditional commercial loans, which often require personal guarantees from all owners of the property, CMBS loans eliminate personal liability. In most cases, if a commercial property owner defaults, they are personally responsible for covering the loan shortfall if the property sale doesn’t cover the balance. With CMBS loans, however, borrowers are shielded from personal responsibility for repaying the loan in the event of default and foreclosure.

This combination of non-recourse terms and unrestricted cash-out options makes CMBS loans an attractive financing solution for commercial property owners and investors in Miami, FL.