Transaction Details

Mezzanine Loan Amount: $25,000,000
Rate: 12.75%
Term: 4 years – Coterminous With $148,000,000 Senior Loan
Amortization: Interest – Only
Combined LTV: 90%
DCR: 1.05
Prepayment: Defeasance
Recourse: Non-Recourse
Lender Origination Fee: 1% in, 1% out

Transaction Description

Summary: Continental Partners successfully arranged a $25,000,000 mezzanine loan behind an existing CMBS loan consisting of two portfolios. The mezzanine loan was secured by 1,275 multifamily units located in San Francisco, CA. The mezzanine loan did not have any holdbacks and gave the Sponsor fresh cash to purchase four properties not associated with this transaction. The loan was structured to be conterminous with the existing CMBS loan, which had four years left on the term. From start to finish, the loan closed in under 30 days.

Opportunity: The Lenders who were quoting the mezzanine loan were coming up short on loan proceeds, which wouldn’t allow the Sponsor to purchase the four new properties. The equity was locked up in the existing portfolio and the existing loans couldn’t be paid off given the high prepayment penalties. Many of the bidding Lenders were concerned with the rent control aspect of the existing portfolio deal, as the rents the tenants were currently paying were not high enough to take out the existing loan and the new mezzanine loan.

Result: Continental Partners completed a detailed rental survey, confirming market rent comps to justify a large enough stabilized NOI that would take out the existing CMBS loan and mezz loan. Based on a comprehensive understanding of the Sponsor’s relocation and renovation plan, the Lender was able to commit to the requested mezzanine loan, which allowed the Sponsor to use the cash out proceeds for the purchase of the 4 new properties.