Until Korth Direct Mortgage LLC (“KDM”) began operations in 2017, there were basically two primary sources of funds for commercial real estate loans – bank, agency, and CMBS lenders at low interest rates, but with many restrictions and “hard money” funding at very high interest rate levels.
KDM provides Middle-Money™ – an in-between alternative for CRE owners who still, for many different reasons, may not achieve bank/agency funding but have shown the ability to manage their properties successfully with very high interest hard money loans.
While bank/agency loans are currently issued near the bank prime rate (currently 5.50%) and hard money loans are issued as high as 10-15%. Middle-Money is brought to qualifying income-producing properties at a rate near 150-200 over the prime rate or currently about 7.00-7.50%.
KDM makes loans directly to the Middle-Money borrowers after the loans are rated in the “A” category or better by statistical rating agencies formally recognized by the United States Securities and Exchange Commission.
KDM funds its loans by selling Mortgage Secured Notes (“MSNs”) to institutions and accredited investors. James Korth, a founder of KDM, states, “Our borrowers are very happy to repay their hard money loans with much lower cost funding. The institutional investors in our MSNs often earn over 300 basis points more on a fully-secured A rated 5 year MSN than unsecured notes with equivalent ratings in the financial markets – everybody wins.” Korth goes on to say, “Because our borrowers have shown they can manage their operations with hard money financing rates, we are confident in their ability to further strengthen both their properties and operations by using our Middle-Money product, adding additional liquidity monthly to their bottom lines.”
Currently the KDM Middle-Money Program makes 5-year interest only loans at loan to values of 65-68% and debt service coverage ratios of 1.35 and higher. KDM is a public company filing its quarterly and annual reports with the SEC. The common stock of KDM is 100% owned by J. W. Korth & Company a 35-year old broker-dealer specializing in mortgages and other fixed income securities. KDM has completed seven loans to date, and sold its MSNs to pension funds, insurance companies, banks, and broker-dealers. Currently all KDM loans and their underlying MSNs are current and performing.
KDM is currently marketing MSNs to fund a $9,690,000 loan in Hammonton, NJ supported by four separate commercial properties.
About Korth Direct Mortgage
Korth Direct Mortgage (“KDM”) is a commercial real estate lender and securitizer based in Miami, Florida. KDM specializes in lending on income producing commercial real estate. The company finances its loans by single-asset single borrower securitizations via its Mortgage Secured Note (“MSN”) program. MSNs are registered corporate bonds issued by KDM and dependent upon and secured by the underlying mortgages made by KDM. The company began lending and completed its first securitization in 2017, and has pioneered the Middle-MoneyTM lending concept via its national lending platform KDMFinancial.com and Middle-Money.com. More information can be found at KorthDirect.com. Middle-Money is a trademark of Korth Direct Mortgage LLC.
Contact: James Korth or Holly Korth
Phone: 786-693-8651 or 786-693-8652
SOURCE J.W. Korth & Company