A class B$-/$C office building located in a Class A location in mid$-$town Phoenix constructed in $1960,$ is $40\%$ vacant. Market vacancy is $12\%$ for Class A buildings and $20\%$ for class B$.$ The prospective new Buyer is under contract to buy this property for $$27$ million. The gross area of the property is $150,000$SF distributed on ten $(10)$ floors. The investor wants to reposition the property into a Class A$-/$B$+$ office building and sell it once stabilized within $5$ years.

$1.$ What kind of loan would you select for this property a CMBS conduit loan or one from a Portfolio Lender? Explain what were the main factors that influenced your choice $($use bullet point format$).$

$2.$ Select all the correct statements:

$$CMBS loans regularly require personal guarantees from the sponsors while Portfolio loans are mostly non$-$recourse

$$Portfolio loans usually have higher interest rates and lower LTVs than CMBS loans

$$The Master Servicer in a CMBS loan is the party that looks to maximize recover for the shareholders which may include foreclosure

$$If there are delays in the execution of the reposition plan, a Portfolio lender is more likely to modify the loan to address a potential default

$$If the property is sold earlier than anticipated it$$s easy and relatively affordable to pre$-$pay a CMBS loan, whereas a Portfolio loan usually have expensive defeasance process