Barry Slatt Mortgage – San Diego office recently announced the funding of a $17,300,000 cash-out refinance of an existing net-leased portfolio of assets in the Midland/Odessa region of West Texas. Vice President and Managing Director Cody Charfauros and Vice President Sam Levy received the assignment from a division of Sentinel Real Estate Group of Irvine, California. Sentinel’s principals have 20+ years in development, investment, and real estate operations experience across a wide diversity of asset types and locations, and are active throughout the country. The subject portfolio is primarily leased to regional middle-market oil industry tenants in steel-construction buildings with very little seasoning on the lease terms, all of which presented something of a challenge to the capital markets due to the very small amount of comparable loans struck in the region. As such, and despite Sentinel’s deep connections to the region and the greater capital markets sphere, they were unable to find a suitable structure for the refinance.
According to Mr. Charfauros, the Slatt team won the assignment due to the company’s “demonstrated expertise in similar single-tenant metal buildings in Texas” and deep relationships with key capital providers. They were able to leverage the team’s experience structuring similar loans as a part of the company’s greater loan portfolio which to date comprises over 1,200 loans in 30+ states.
The Sentinel team required several key loan features as Slatt’s charge, including that the new loan return cash out well above their initial development basis in the property along with interest rate and terms that measurably improved cash flow and the structure of the investment. Sentinel intended to deploy the capital on additional development in the region and free up their bank for other needs, so time was of the essence.
The Slatt team extensively marketed the refinance opportunity and successfully competed multiple offers among 30+ capital sources, including both correspondent lenders and open market sources. The Slatt team was able to reduce the borrower’s initial interest rate by over 50bps from their bank loan and structured the ability to recapture early some of the gain in value due to their development and leasing efforts.
Additionally, Slatt successfully navigated the loan team through other crucial needs required for the client’s future investment strategies.
The Slatt team performed the following services:
- Initial scope, loan packaging, and preliminary underwriting
- Capital markets marketing, offer vetting and submittal
- Loan structure negotiation, inclusive of specific language required by their future investment strategies
- Coordination among legal counsel for borrower and lender for efficient final documents
- Advisory services to 3rd Party vendors including advising on the MAI Appraisal, environmental reports, zoning, survey, and insurance providers
- Coordination of approval and signatures among principals located across the globe