Commercial mortgage loans for real estate: Acquisition loan
This $14 million acquisition loan for a midrise office building in the Southeast fell out of escrow 5 times with other buyers before Financial Compound began working on the deal. We assured the selling broker that our client would close within the 20 day escrow period, after completing our preliminary analysis of the project in 2 days. Through diligent up-front research we determined that the persistent 23% vacancy at the property over the past 3 years was not a negative reflection on the property, and was related to a small group of tenants who relocated to nearby trade areas for reasons unrelated to this property. This positive information was not conveyed to us by the selling broker or property manager, and both were unable to confirm our findings.
Commercial Mortgage Broker Financial Compound obtained third party verification for our lender and made this ‘unfinanceable’ deal easily financeable. Furthermore, during the closing process, due to capital market fluctuations the lender increased our interest rate, and based on the debt coverage constraint our loan proceeds were in jeopardy. We dug into the numbers and leases and noticed that the CAM projections provided by the seller were understated. The seller had not been passing through all the expenses entitled per the leases. Our increased CAM projections enabled the lender to maintain the commercial mortgage loan proceeds where other lenders we found interested in this deal would not lend more than $11 million. Other loan terms included 80% of purchase price, 10 year term with the first 4 years interest only then 30 year amortization, sub 7% interest rate, one-time earnup for additional loan proceeds upon increased NOI.
Commercial Mortgage Broker Financial Compound can be a valuable tool for borrowers seeking acquisition loans and acquisition financing. A commercial mortgage broker can help the buyer determine the appropriate price and financial product for the commercial real estate asset.