Financial Compound arranged two acquisition loans with 2 different commercial mortgage lenders totaling $15,000,000 for the purchase of two adjacent suburban midrise office buildings in North Carolina built in the 1980s. Building A is 95% occupied, and building B 40% occupied. Financial Compound surveyed the commercial real estate capital markets and recommended as the optimal financial structure, a fixed rate loan on the stabilized property and a floating rate bridge loan on the other property until it stabilizes. We considered some financing proposals from a few different lending sources willing to make two cross collateralized loans, but opted for two different lenders, each with one building as collateral.
Financial Compound customized SNDA’s and estoppels that were acceptable to both lenders to make the process easier for the property management firm (which was being retained by the borrower). As both properties were being sold by the same seller as a package, the purchase price was allocated between the two properties to meet each lenders’ underwriting requirements.
Loan terms for the permanent loan included a 5.8% interest rate, 10 year term with a 30 year amortization and loan to value of 75%. No lender fee. The loan is non-recourse.
Loan terms for the bridge loan included a floating interest rate of Libor plus 3.75%, 3 year maturity along with two 1 year extensions, a 1% lender fee, 1/2% exit fee. The loan is non-recourse.
These transactions demonstrate how skilled Financial Compound was able help guide the borrower by identifying a capital markets opportunity and structuring and customizing the loan terms to achieve the borrower’s objectives.