Summary: Continental Partners arranged mini-perm debt financing of $11,500,000 for three commercial assets in greater Sacramento County. The refinance of this 136,197 SF portfolio was comprised of one retail and two office properties. The total loan commitment consisted of $11,500,000, which represents 70% of the total stabilized value. Initial funding was $8,030,000 with an additional $3,470,000 available for earn-out as new leases are signed. The 5-year WSJ Prime-based loan floats at 1% over the Prime rate with a floor of 4.25%.
Opportunity: With a blended occupancy rate for the portfolio of only 66%, many Lenders were hesitant to move on this opportunity. Lenders were also reluctant to re-enter this market due to the fact it was hit harder in the downturn when compared to primary CBD’s. Tenants were circling the vacant spaces, but no formal LOI’s had been submitted.
Result: Continental Partners was able to source competitive mini-perm financing through an international banking correspondent. The Sponsor’s request was for a bridge-like structure with flexible prepay. By cross collateralizing and pooling the assets into one loan, Continental Partners was able to fund with mini-perm pricing versus traditional bridge debt, which can be much more expensive. We were able to incorporate an earn-out structure to keep the Sponsor’s costs down. Also, by structuring release provisions into the loan docs, the Sponsor will have the ability to sell off assets individually, while the loan is resized to the pro rata share of the remaining collateral.