Mr. Scott Monasch, Principal with Barry Slatt Mortgage, recently closed an acquisition loan for a large group of investors based in China. The combined loan amount of approximately $6,660,000 was utilized by Mr. Monasch's clients to acquire two single tenant industrial cross dock facilities in two separate states. The closed loan represents a full-term non-recourse interest-only loan with an interest rate in the upper 4% range, fixed for 10 years. The lender for the deal is a CMBS Lender, with which Mr. Monasch has completed multiple loans with.
There were a number of challenges to structuring and closing the loan, as the existing remaining lease term on the properties were less than 6 years and 7 years respectively. With a full term 10 year I/O term, Mr. Monasch was able to overcome the short term leases by structuring a cross collateralization of the two properties with release provisions. Additionally, a cash flow sweep was set-up, if the tenant did not renew their lease, in a certain time frame prior to the current lease term expiration. An additional hurdle was presented, as the borrowing group consists exclusively of borrowers residing outside of the United States, just one of whom is a U.S. Citizen. Additionally, the borrowing group, while inclusive of all high net-worth individuals, collectively holds limited domestic assets. Mr. Monasch was able to help the lender understand the overall financial strength of the borrowing group and use the U.S. borrower for the carve-out guaranties.
Mr. Monasch worked closely with the borrowers' counsel and the lender, to create and refine many elements of the loan and the acquisition in general, taking on a "roll-up your sleeves" approach to figure out and create a structure that worked for a successful closing.
