ValueXpress obtained a $1,725,000 bridge loan that was utilized to acquire a 13,652 square feet mixed-use building located in Staten Island, New York. The building is 97% occupied and leased to a mix of local retail and office tenants.
“The transaction demonstrated our ability to provide financing solutions for our clients even when circumstances change at the last minute,” commented Dennis Suh, Senior Vice President of ValueXpress. “The transaction was structured as a standard fixed-rate CMBS conduit loan, which is not readily available in the market for under $3 million. However, ValueXpress has a long-standing relationship with a small-balance CMBS lender that will write loans as small as $1 million for ValueXpress clients.”
However, during underwriting it was discovered that expense reimbursements were not being collected by the seller in accordance with the leases, and the loan did not meet minimum debt-service coverage requirements for a loan equal to 75% of the purchase price. “I petitioned the lender to fund the deal on a floating rate basis at full proceeds, and they agreed,” stated Dennis. “In return, I agreed to assist the buyer in setting up billing and collections, and once the buyer begins to receive reimbursements from the tenants, the lender has agreed to convert the loan to a 10-year fixed-rate loan.”
“It is rare to see a bridge loan in the marketplace for less than $5 million, but this transaction is yet another example of how our relationships with our partners can be called upon to find solutions for clients. It was critically important in this situation since the client risked losing his purchase deposit if the purchase of the property did not close with a 75% loan,” commented Mike Sneden, Executive Vice President at ValueXpress.