Transaction Details

Loan Amount: $22,060,000
Rate: 3.75% Floor
Term: 5 Years
Amortization: 25 Years
LTV: 70% Loan To Stabilized Value
DCR: 1.30
Prepayment: None
Recourse:  Recourse
Lender Origination Fee: 0.25%

Transaction Description

Summary: Continental Partners sourced mini-perm financing for Rivergate Shopping Center – a 168,135 SF anchored retail property in Rancho Cordova, California. The $22,060,000 loan commitment was structured at 70% of the stabilized property value with a $12,000,000 initial funding structured at 65% of the as-is value. Earn-out proceeds were structured and released in five phases totaling $10,060,000. Pricing was WSJ Prime based and floated with a floor of 3.75%.

Opportunity: Most Lenders had trouble getting to the loan proceeds requested, given the Sponsor’s low cost basis in the REO acquisition. Also, the Property was only 27% occupied at the time of financing. The anchor space that housed Kmart was being remodeled and redeveloped since Kmart’s lease had been terminated. Buildout for the new anchors, Smart & Final and Sportsman’s Warehouse, had yet to be completed.

Result: Continental Partners was able to source competitive mini-perm financing through an international banking correspondent. The structure allowed the Sponsor to refinance expensive acquisition debt and cash out all initial equity in the deal. The earn-out proceeds, or good news dollars, were structured like a construction loan where the Sponsor didn’t pay interest until additional funds were released, so as to not incur negative amortization. Rivergate Shopping Center is now fully remodeled and sits at 90% occupancy in one of the highest traffic intersections in the Greater Sacramento area. Anchors now include Smart & Final, Sportsman’s Warehouse and Pet Club.