Food Lion is dark and remains on the lease for many years and subleased their space to the fitness center, although their debt rating is “junk.” Two additional tenants vacated. The Center suffers from lender-perceived deferred maintenance, which borrowers thought was not a problem. Financial Compound structured a springing cash flow sweep, which would go into effect if the fitness center went dark.
Financial Compound explained the circumstances surrounding the two tenants who vacated their spaces to demonstrate that this short-term vacancy was not a bad reflection on the property. The borrower discussed with replacement tenants during the application process, and the loan contemplated a lower mortgage interest rate based on signed leases at the time of funding.
Concerning the deferred maintenance, the lender agreed to require a cure of only the deferred maintenance visible from the frontage road. Loan terms included a 5.81% fixed interest rate for ten years and a 30-year amortization. No lender fee. Non-recourse.