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Commercial Real Estate Underwriting and Consulting

Mezzanine Loan Case Study


Private Equity Real Estate Fund


Seven building Class A-/B office portfolio in a core market. Portfolio required significant TI and re-positioning. Client was providing sub-mezzanine debt with a base funding and future funding allowed upon lease up of the project. Entire capital stack of $210 million at closing with earn out to $238 million.


Credit Approval Memo with associated Argus analysis and cash flow analysis. 30 days.

▪Exceder Scope of Work:

  • Participation in all due diligence calls, maintenance and distribution of the due diligence checklist.
  • Analysis of all in place leases including extension and landlord termination rights.
  • Historical CAM reconciliation by tenant to actual operating costs and lease terms.
  • Analysis of historical operating history and reconciliation of discrepancies and expense changes greater than 5% by property.
  • Order, review and summarize all third party reports.
  • Detailed market investigation including calls and meetings with leasing brokers at all competing properties and discussions with investment sales brokers.
  • Site inspection of all buildings and the competitive buildings for each property.
  • Review Borrower’s business plan and cost projections.
  • Review Borrower Argus models for each property including all lease up, CAM pool and rollover assumptions.
  • Adjust Argus assumptions by tenant based on market investigation, lease reviews and CAM reconciliation analysis.
  • Develop both an As Is and As Stabilized pro-forma cash flows for each property including a tenant by tenant calculation of CAM reimbursements in accordance with lease terms and historical billing/collection.
  • Compare underwritten CAM projections by tenant to Argus projections to ensure consistency in methodology.
  • Prepare roll up models of both the Argus and underwritten cash flow analysis.
  • Analysis of projected cash flow shortfalls and Borrower/Sponsor’s ability to fund all projected shortfalls.
  • Multiple sensitivity analysis and modeling of the cash flow waterfall for each scenario to the various loan positions.
  • Preparation of the Credit Approval Memo.
  • Estoppel/SNDA review and reconciliation.

Underwriting was completed and loan was funded within 30 days.