Commercial Real Estate Loans > The Syndication of Large Commercial Construction Loans

The Syndication of Large Commercial Construction Loans

Commercial Construction Loans Over $10 Million Are Often Made By a Syndicate of Commercial Banks

Suppose a mid-sized commercial bank gets a $15 million commercial construction loan request from a commercial property developer who is important to the bank. Fifteen million dollars, however, is an awfully large commercial construction loan for a commercial bank with just $400 million in assets, but let's say the commercial construction loan request is a good one.

What might happen is that our mid-sized bank might lead a small syndicate of friendly competitors to make the $15 million commercial construction loan. The loan may be priced at prime plus 1.5% floating with a 7.5% floor and a loan fee of 1.5 points. The lead bank might then sell off participations to other banks at prime plus 1% floating with a 7% floor and a loan fee of 1 point. The lead bank might take $3 million of the $15 million deal.

The lead bank would then earn prime plus 1% floating and 1 point on it's $3 million portion and would also earn a lead lender's fee of 1/2% interest and 1/2 point on the entire $15 million. The lead lender would then be responsible for disbursing the progress payments and handling any foreclosure on the commercial construction loan.

If you need a large commercial construction loan, you can find several hundred commercial construction lenders on C-Loans.com.

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