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Old 09-28-2005, 09:36 AM
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Default Enhancing Proceeds from a Loan on a Large Net Leased Property Acquisition

Depending on the prevailing interest rates and the term of the Net Lease
(which must be of an investment grade), Buyers of these properties may wish to
investigate extending the amortization to 4 to 5 years beyond the standard
term of a loan or, alternately , through creating a mortgage balloon, utilizing
specialty insurance products as the security.

In the instant hypothetical, the net proceeds from the structured mortgage
loan (i.e. after the payment of transaction costs) were at 8% or so above the
self-amortizing mortgage proceeds at the lesser term.

Accordingly, the principal benefits to Borrowers are in a higher
loan-to-value of debt and thus in contributing a reduced out-of-pocket equity requiremen
to facilitate an acquisitiont.

The optimal submissions bear the following characteristics :

* Sized at $10 million to $175 million.

* Acquisitions of existing net leased properties..

* Lease terms at minimum of 20 years.

* Minimum of BBB.

If you wish to explore the financing structures, please contact Harold
Margolin of Chilmark Associates Inc. at 203-353-0897.


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