Barry Slatt Mortgage Executive Vice President Scott Monasch recently closed a $13,500,000 non-recourse, below 4.5%, cash-out, 10-year interest only loan on a four property crossed portfolio. The loan was on collateral properties in two different states and two different Hawaiian Islands. The loan provided for a cash out refinance of $2.0mm on a legacy 5-year 2011 CMBS loan, of which proceeds were used for the defeasance of the loan, retirement of some additional debt and other borrower uses.
The loan provided significant challenges in that two of the properties were below market ground leases (as the collateral), one of which was a single tenant below investment grade watch list credit, with its lease expiring in early 2016 and the option notification date not until late 2015. Another property was a small local property in Hawaii that would not qualify for securitization on its own.
The loan was extensively presented within the CMBS arena, as the its metrics/request eliminated other lending sources. This financing required a very creative and aggressive lender that understood the long history of the properties willing to take the time to understand the substantial borrower. Mr. Monasch was able to identify this lender and also negotiated the allowance of an entity as the carve out guarantor, waive the independent director requirement, require little to no reserves and many other favorable borrower terms. The loan was closed as applied in 44 days, and aggressively negotiated down to a 7.25% DY requirement.
The borrower was referred to Monasch by an existing client that shared his extensive knowledge and personal relationships within the lending arena and full service approach. The borrower has completed more than 30 CMBS executions and has always gone direct. Part of the requirement to hire Monasch was that he do all the heavy lifting, processing and the blocking and tackling. This required Monasch and his team to have daily involvement in every aspect of the loan arrangement, including setting up and negotiating the defeasance costs, assisting with the estoppels and SNDA’s, ordering and supplying the surveys, completing forms, proving all checklist documents in coordination with the borrower support staff and assistance in reviewing and negotiating the loan documents with the borrower’s council. All parties were extremely pleased with the team effort on the transaction.