Multifamily Cash-Out Refinance w/Minimal Operating History

Transaction Description:  Shahin Yazdi placed the cash-out refinance of two multifamily properties in Los Angeles for the same borrower. Both loans are fixed at 4.65% for 10 years. At the end of the fixed term, rates will adjust semi-annually to 6-month LIBOR plus 235 for the remaining 5 years of the term.

Challenge: Historical operating history was extremely limited. One asset was purchased within the last 6 months and had no historical Profit & Loss Statements prior to the acquisition. The 2nd property was purchased last year and it too had minimal historical data. The Borrower requested we underwrite the current repositioned value of the property rather than the cost basis for these loans as his cost basis is significantly lower than the current property value.

Solution: Using extensive market research, Mr. Yazdi was able to compensate for the lack of historical data. Actual cash flow history although limited, was used to determine reasonable estimates of operations. Market data also facilitated in confirming our underwritten cash flow. The Borrower’s financial strength supported a 65% LTV request regardless of the recent capitalization.