$1,550,000 Cash-Out Refinance of a Special Purpose, Single Tenant Building to 65% LTV

Transaction Description: Shahin Yazdi successfully placed the 65% LTV cash-out refinance of a Kindercare Daycare facility in Southern California. The special use tenant is privately held; no store sales information was available for underwriting.

Challenge: Lenders view the preschool as a special purpose asset, a product type that attracts limited lender interest. The cash-out requirement further complicated the transaction, as did the shortness of the remaining 6-year lease term.

Solution: The subject property’s exceptional location allowed the lender to become comfortable with the special purpose use, leverage, and return of borrower equity. The tenant had been at this location since 1985, in addition to signing a new lease in 2003. The Lender did not require a TI/LC reserve account, and offered the Borrower a 3-year loan extension once the tenant renews their lease.