Commercial Bridge Loan for Shopping Center in the Midwest

Commercial Bridge Loan

Our client was foreclosed on this property and had a right of redemption to buy back their 65% occupied property for approximately $9,000,000, a price equivalent to their former outstanding loan balance. Financial Compound put this all-in-cost acquisition loan into application with a hard money lender 12 days before the borrower’s right expired. The center is anchored by a grocery store along with a drugstore tenant, where both leases expire a few years after this loan closing.

A big challenge of this financing is the large gap between the current NOI of $250,000, and stabilized proforma NOI of $3,000,000.  Financial Compound was able to identify strong support by the municipality, community groups and tenants at the center in favor of the borrower’s repositioning business plan and mitigated the lender’s concerns by modeling two downside repositioning scenarios;  Financial Compound was able to help the borrower to “set aside” the foreclosure so that it would not appear on it’s credit record.  For this transaction, Financial Compound had to talk to over 100 lenders over a three week period in order to find a lender willing to make this loan within the borrower’s timeframe.

The loan terms included a 13% interest rate, 18 month term, interest only.  No prepayment penalty.  The lender fee was 5% along with a 25% profit participation of future upside.