Shahin Yazdi placed the 65% of purchase debt for a 32 unit multifamily asset. The brick building is located in the mid-Wilshire district of Los Angeles. The non-recourse loan is fixed for five years at 3.725% and offers three years of interest only. The lender did not require an earthquake risk assessment on the brick asset.
Challenge: The Borrower requested non-recourse debt, not typically available for brick assets in California. A deed restriction on title required several units to be rented to low income residents on a reduced basis. The below market rent significantly impacted the net cash flow at funding.
Solution: The Lender accepted additional cash to purchase in order to mitigate the repayment guarantee on the brick building. The strong asset location also served as an enticement to proceed on a non-recourse basis. The deed restriction expires in 2 years and will result in a spike to the NOI. A three year interest only component was structured to take advantage of future cash flow.
