California

Marc Schillinger secured the cash-out refinance to 80% of appraised value on a single-tenant office building in Burbank, California. The new loan will effectively operate as a secured line of credit, allowing the borrower to draw down and pay back funds at the Borrowers’ discretion during the first 12 months of the term. The loan is interest-only for the first year, priced at 2.91% (L+265). Beginning month thirteen, the loan rolls into a 20-year ARM, amortized over 25 years and priced at 329 over the then-current 12-MAT. There is no prepayment penalty throughout the term of the loan. Challenge: The Borrower requested high leverage cash-out on the subject property in order to acquire an additional office building. It is challenging for lenders to underwrite this scenario because of the unknown impact on global cash flows. The request was for the highest leverage loan program with the lowest prepayment penalty and closing fees. It was also important that the loan did not have a short-term maturity or be cross collateralized with the to-be-purchased asset. Solution: George Smith Partners worked with the lender to create a unique Mini-Perm structure that catered to the exact needs of the borrower. The new loan allows for a draw of up to 80% of the appraised value at any time during the first year. To further satisfy the borrower’s requests, the lender required no points at the close, and agreed to a 21-year total loan term. GSP was able to negotiate a zero prepayment penalty should the borrower decide to lock a long-term fixed rate or liquidate the asset at any time.