Nick West, Vice President at Barry Slatt Mortgage, recently closed a $7,985,000 bridge loan on a 66,000 SF medical office building in Glendale, California.
The property is on a non-subordinated hospital ground lease, adjacent to the hospital. Submarket fundamentals are strong. After the previous management company allowed occupancy and rents to slip below market, the client hired a new management and leasing team to reposition the property.
The client engaged Barry Slatt Mortgage to arrange a bridge loan to refinance the existing bank loan and provide cash reserves to finance the business plan. After obtaining multiple quotes from bank and non-bank lenders, Barry Slatt placed the loan with one of its life insurance company correspondent lenders.
The loan term is 3 years with two 1-year extensions. Debt service is interest-only at a very competitive spread over LIBOR. The lender will hold back over $4.2 Million of reserves for capital expenditures, tenant improvements, leasing commissions, and interest shortfall. The loan is non-recourse with standard carve-outs.
The hospital ground lease presented some legal issues. The lender’s closing team included experienced outside counsel who were able to craft a successful solution.