Summary: Continental Partners arranged a $6,000,000 loan to refinance an existing bridge loan in Malibu, CA. The Sponsor performed a market survey and anticipated renovations would further increase the NOI. Financing was sized to 70% of cost, which included an interest reserve, funds for tenant improvements and leasing commissions. The loan was priced at 30-day LIBOR + 350 with a floor of 4.00% and has no prepayment penalty.
Opportunity: The buyers have subsequently negotiated a lease extension with the existing Malibu Gym tenant and leased a large portion of the office (formerly owner occupied). Most lenders will not provide cash out if the Property has not stabilized. The Sponsor will still in process of renovating the exterior with all new exterior windows, new storefronts on the ground-floor level, contemporary aluminum paneling and façade, skylight repairs/replacements, exterior stucco and paint, new improvements for existing tenants and new tenant spaces, common area repairs and stair replacements.
Result: Continental Partners completed a thorough market survey to confirm the market rent comps to justify the cash out. Continental Partners found a Lender that provided a bridge loan facility which structured an interest reserve to cover the debt service shortfall and allowed approximately $800,000 for future advances for tenant improvements, leasing commissions and exterior renovations, with the commitment based on the prospective stabilized value. Based on a thorough understanding of the borrower’s business plan as well as market research, the lender was able commit to a larger loan amount than originally requested, which allowed the borrower to redirect equity into other projects.