Commercial Mortgage Real Estate Loans: Special use

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Commercial Mortgage Loan refinance was arranged by Financial Compound for the $7.3 million refinance of a golf course located in southern California.  With a property cash flow of $450,000 annually, this refinance is worth bragging about whether or not it took place during the credit crunch, which it did.  The lender required a couple of mild credit enhancements from the borrower which burn off once the golf course achieves a 1.25 DCR on trailing 12 month NOI. The lender used legal counsel to prepare and customize loan documents for this transaction at Financial Compound’s request, a first for this bank who had always used Robodocs prior to closing this loan. This is a 5 year loan with the rate fixed at 8.5% and a 25 year amortization schedule. The lender charged a 1% fee.

Financial Compound worked for about 18 months placing this transaction and spoke to over 250 lenders in order to find the right fit.  A strong commercial mortgage broker is a valuable asset to a commercial real estate borrower in its ability to access a wide range of capital providers to identify and work with a lender who is most suitable for the transaction.

An important aspect of this golf course refinance was the structuring of the loan.  The loan was made as a personal loan to the borrower, with the golf course serving as additional collateral.  In addition to the personal guarantee, the lender required negative declarations on a couple of other commercial real estate properties which the borrower owns.  Structuring the transaction in this way allowed this particular lender to book the loan where many other lenders were unable or unwilling to find a way to perform the transaction.

Financial Compound

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