Transaction Details

Loan Amount: $9,282,000
Rate: 4.75%
Term: 5 years
Amortization: 3 Months I.O.; 30 Years Thereafter
LTC: 70%
DCR: 1.35
Prepayment: 2,1,1,0,0
Recourse: Non-Recourse
Lender Origination Fee: 0.85%

Transaction Description

Summary: Continental Partners successfully arranged a $9,282,000 mini-perm loan for the refinance of a Class “A” office building in Southern California on the behalf of a repeat client. At the time of loan
application, the 44,000 SF property was physically vacant and the Sponsor was in heavily documented negotiations with as many as five different tenants to occupy the property; including U.S. Marine Corps Recruitment (GSA). The Sponsor engaged Continental to source a highly flexible balance sheet Lender capable of adjusting their loan program based on final tenant mix, tenant improvements & leasing commissions to follow the imminent executed leases. The 5-year fixed loan amortized over 30 years, sized to 70% of current value, not to exceed 65% of completed value. The loan structure also carried a highly flexible pre-payment penalty of 2% year 1, 1% years 2 and 3, and 0% thereafter. Continental was able to negotiate a short 3 month interest – only period to benefit the Sponsor during lease up.

Opportunity: Continental Partners was aware the Sponsor had an incredible piece of real estate with many different leasing options and the Sponsor wanted to lock in a sub 5% interest rate quickly due to the rising interest rate environment. Most lenders were having a very tough time understanding the true stabilized, potential value of the property and many were not comfortable going under application without a clear exit strategy with signed leases in hand. Continental provided LOIs from potential tenants for the property, numerous leasing comps and sales comps within the submarket to justify the high as is “dark value”, as well as the potential stabilized value once the new tenants took occupancy.

Result: Result: Continental Partners was able to source a balance sheet lender who was able to understand the Sponsor’s business plan and who was willing to work together, as a team, with the sponsor moving
forward. While under loan application, the Sponsor successfully executed long term leases with two regional, credit-worthy tenants. The loan facility had an initial funding amount of $8,694,000, with the total commitment of $9,282,000. The difference of $588,000 will be released as cash out proceeds once the Sponsor completes the remaining minor tenant improvements necessary to stabilize the property. Continental was also able to negotiate a reduction of 15 bps to the lenders typical origination fee, which helped keep the deal moving forward.