One-Stop Shopping Spreads to Commercial Lending Arena.

An increasingly common trend toward the offering of "one-stop shopping" for commercial real estate financing also has implications for servicers. This sort of arrangement has the potential to create servicing complications, with more than one servicer being associated with a deal that might ultimately be carved up into multiple pieces. Lenders have increasingly moved in this direction as interest rates have moved lower and lower in the last few years, in a bid to attract and retain borrowers, with the trend even spilling over into the smaller loan sector.

Mostly, this means the lender provides first mortgage and mezzanine financing, or does an A/B loan structure, and later sells off the higher risk portion of the loan. Bridge financing and preferred equity are sometimes available at the same place as well.

Richard Ortiz, managing director, Hudson Realty Capital, has seen an increasing trend toward the enablement of this sort of "one-stop shopping," even for smaller loan sizes, which he defines as those less than $10 million. He noted that traditionally it used to be more common for larger loan sizes, in the over $25 million category.

He observed, "What you're seeing is that because the structures are somewhat more accepted, they are easier to replicate on a smaller scale. You are able to say to a borrower, 'We will do all the financing for you. We will take away all the headache of you having to run out and get the mezzanine provider, the first mortgage, and coordinate the intercreditor agreements. That's the service we provide for you.' And to the extent that we're able to make it a seamless transaction, one-stop shopping, there is a value that is being provided to the borrower so that they can simply concentrate on their business as opposed to the financing aspects of the transaction." As a result of this, intercreditor agreements have to be understood.

Susan Merrick, managing ...