Posted by Bob Ridge on August 27, 2003 at 02:32:46:
We will be selling it when it’s fully leased and seasoned, AND we do want to retain 100% ownership until we sell it. IOW, we don’t want a lender who will require equity in the project while we’re in it or profit participation when we sell it.
The seller is already grudgingly putting a large amount of money into escrow to take care of some environmental remediation. This is a sore point with them (though it shouldn’t be), and we are pretty certain that for this reason they will not cooperate with a seller second. We’d prefer to look for some kind of mezz loan.
Best loan package out there for retail strip? - Posted by Bob Ridge
Posted by Bob Ridge on August 25, 2003 at 23:00:27:
We are ready to close on a $4.5M retail strip that should be fully leased within a few months. A couple of entities are putting together “pro formas” for us that seem to agree that the plaza will be worth $7-7.5M when fully leased. Though the cash flow will be nice, our plan is to sell the leased plaza for profit and move on.
My basic question is this: Is it unrealistic to expect that someone out there can do a 95% LTV, non-recourse, interest-only loan where we retain 100% ownership? I know that sounds like a stretch, but several leads are coming close. One does 90% LTV non-recourse at 9% interest. One will go up to 95%, with 20% of that being a mezz loan, averaging 7.5% interest, but requiring guarantees. One will do 90% at 5.5%, also requiring guarantees.
Has anyone here heard of or worked with lenders that might be able to beat what we’ve found so far? There are so many out there that I’m afraid I’ve only scratched the surface, and I’d hate to miss out on the perfect package for us. Thanks for suggestions…
Re: Best loan package out there for retail strip? - Posted by Don Dion
Posted by Don Dion on August 26, 2003 at 11:00:10:
Your post is confusing. In the first paragraph your selling it and in the second your looking for retaining 100% ownership? Are you looking for financing for your client that is buying or are you keeping it?
The answer to your question is there a better program out there yes! I have a lender that does 85% first conduit loans based on the T-Bill plus a margin and will allow for a seller second up to a total of 95% LTC. This is a non recourse fixed rate product with terms from 5 to 20yrs and amortised over 25yrs. Or you can go with bridge loan financing which would be were the interest only products come into play.