Summary: Continental Partners arranged the $29,650,000 first mortgage refinance of a 116-unit Class A multifamily asset known as Packard Lofts located steps away from Staples Center in downtown Los Angeles. The transaction featured a 75% loan-to-value, 10-year fixed rate, non-recourse loan.The loan was interest – only for all 10 years to maximize cash flow to the Sponsor.Proceeds were used to pay off an existing construction loan, pay off outstanding liens against the Property and provided funds for future renovations to the bottom floor retail.
Opportunity: At the time of refinance the building was only 87% occupied for a one-week period, which made a few Lenders uneasy given the short operating history. Additionally, the retail portion of the Property only had a few leases signed, but none of the tenants had taken occupancy.The requested loan amount had a substantial amount of cash out above the Sponsor’s existing construction loan. A number of Lenders were not comfortable completely cashing out the Sponsor from the deal without the tenants in occupancy.
Result: Continental Partners completed a market survey of the new class “A” multifamily and retail developments in the downtown Los Angeles submarket. Based on the Continental Partners survey the Lender understood how fast the market was absorbing units and committed to a larger loan amount than originally requested by lowering their debt yield below 7.5%. Furthermore, the Lender agreed to provide an interest – only loan for all 10 years which allowed the Sponsor to pay off some the preferred return from cash flow.