Challenges:
The existing loans had a prepayment penalty in the amount of $750,000, which either needed to be paid off or waived by the lender.
The commercial real estate sector had become volatile due to COVID-19, resulting in a number of businesses permanently closing.
All five properties were retail related. One temporarily closed and as a result, their rent was reduced by 50%.
A portion of the portfolio was cross-collateralized and needed to be released and restructured.
Outcome:
Based on the borrower’s long-standing relationship with the lender, coupled with their ability to successfully manage a large portfolio, the existing life insurance lender agreed to the following terms:
The $750,000 prepayment payment penalty was waived in its entirety.
A new loan was placed on each of the five properties - fixed for 9 years.
The interest rate was lowered by .75 basis points and the annual debt payment was reduced by $225,000.
The lender allowed release clauses on the properties that were cross-collateralized and a new structure was implemented.
