Transaction Overview
Shahin Yazdi successfully placed the 65% acquisition loan on a 3,325 square foot retail asset located in Southern California. At close, the in-place cash flow did not support the funded loan. The 5 year term is fixed for 3 years, a characteristic that is uncommon for transactions that do not support the debt with a positive coverage ratio. The 4.75% rate will float over Prime after the initial three year term.
Challenge: Despite the new cash equity to purchase, in-place income did not support the loan amount requested. The sponsor was rebuilding his assets from a previous bankruptcy that significantly impacted his balance sheet and global cash flow.
Solution: The borrower’s business plan called for collection of past-due income the prior owner had ignored and increase rents for several month-to-month tenants. GSP identified a lender who understood the premiere location and underwrote current market conditions to support the below breakeven debt coverage ratio. Sponsor’s weak global cash flow was mitigated by his strong management resume and fresh cash equity infusion.
