ValueXpress has arranged a $3.4-million first mortgage CMBS conduit loan for the refinance of an industrial/flex building located in Warrensville Heights, a suburb of Cleveland, Ohio. The purpose of the loan was to obtain a ten-year fixed-rate loan term on a non-recourse basis to replace an existing recourse loan.
The sponsor developed the 58,000-square-foot property in 2001. The building is currently leased to five tenants, including the sponsor’s company, Gino’s Awards, which occupies 59% of the building. Gino’s Awards is a manufacturer and retailer of awards, corporate gifts as well as personalized and recognition products. The property is located in a market with low vacancy and strong demand for industrial/flex space. In addition, many of the other tenants have leased space at the property for over 15 years.
“The greatest challenge was to successfully execute a refinancing for a property that is majority owner-occupied,” said Dennis Suh, Senior Vice President at ValueXpress, who originated the loan for ValueXpress. “In this instance, we created a 15-year lease between Gino’s and the borrowing entity at a rental rate that balanced debt-service coverage requirements for underwriting while providing a comfortable rent payment for Gino’s.”
Assisting in the transaction was Stephen Thompson, a Commercial Capital Training Group (CCTG) graduate. “Local community banks were unable to provide this client sufficient leverage to pay off the existing loan including transaction costs, so I recommended the client pursue a CMBS execution through Dennis,” said Thompson. “In the end, it was the right choice.”