ValueXpress has arranged a $9.5-million CMBS conduit loan for the refinance of a multi-tenant industrial park located in Watkins, Colorado, which is approximately 25 miles east of Denver. The 299,835-square-foot property was constructed in 1970 as a single-user property. The sponsor purchased the property in 2018 and completed a major capital improvement program to create a multi-tenant industrial center that is 86% leased to approximately 21 tenants. The transaction was arranged by Dennis Suh, Senior Vice President at ValueXpress.
The sponsor’s company, which manufactures Cannabidiol (otherwise known as CBD) from hemp, is also a tenant in the property. “This was a groundbreaking transaction for the CMBS conduit market,” said Suh. “To our knowledge, this is the first CMBS conduit loan transaction in which a major property tenant manufactured and stored hemp and CBD oil.” Although the 2018 Farm Bill reclassified hemp as an agricultural product and federally legal, the possession of hemp is controversial within lending circles.
“To get all parties comfortable, I arranged for a legal opinion confirming the validity of the legality of hemp possession and CBD manufacturing as outlined in the Farm Bill,” said Suh. “This helped pave the way to closing.”
The sponsor was very satisfied with the transaction as the non-recourse CMBS conduit loan replaced high-cost recourse debt that was utilized to acquire the property. “The sponsor was unsure that the transaction could be completed with the controversy surrounding hemp and CBD oil; however, I worked every angle to ensure that everyone understood the merits of the transaction and I was able to provide mitigants for all the credit concerns, enabling the transaction to close,” said Suh.
For your next industrial transaction, contact Dennis Suh at email@example.com.