Transaction Overview
Shahin Yazdi successfully placed the 80% loan-to-value cash-out refinance of construction contractors’ corporate headquarters in Ann Arbor, MI. Proceeds from the conventional loan (non-SBA financing) were reinvested into the operating company for capital upgrades. The loan will float over LIBOR for five years, and amortized over 20 years.
Challenge: The Sponsor’s primary source of repayment is through construction operations, which is not an attractive industry to lenders in this financial environment. Sales dipped significantly in 2009 & 2010. The appraisal came in below expectations and jeopardized loan proceeds. The Borrower required a return of capital through this refinance.
Solution: The Borrower proved a robust 2011, off-setting the prior two years of declines. An increase in future operational cash flow was demonstrated as orders placed in prior years were re-booked for 2012 and 2013. The Borrower has a +30 operational history, having survived several prior market downturns. The Lender agreed to increase the LTV constraint from 75% to 80% in order to accommodate the requested loan proceeds. The Lender became comfortable in the use of proceeds in order to better facilitate future earnings of the construction company.
