The Madison Group (TMG), a leading source of self-storage financing nationwide, arranged the $1,753,000 refinance for a self-storage facility in southern Utah. The property consists of 347 units and RV parking. The borrower was interested in a cost effective bridge loan to recapture equity with no prepayment penalty, allow time for stabilization, and allow for a portfolio refinance of this and two other properties in the next year. The finalized terms of this loan were 5% interest-only rate with a 3-year term.
This is a self-storage facility with 347 self-storage units. It is a modern, steel construction facility initially built in 2005 that needed updating and better management when purchased in 2017. The borrowers added a 28-space covered RV structure. The property is now fully enclosed, with gated keypad access, and has an on-site office and caretaker apartment where a couple lives functioning as a full-time office manager and maintenance person.
The property was acquired at a discounted cash price on a 4-day escrow and close with private money. All improvements since purchase have also been financed with that same private money source and rolled into the single first lienholder position.
All of these changes will result in increased income and controlled expenses, and will lead to a stabilized net operating income within six months. The borrowers will then have TMG provide a 3-property, non-recourse loan for the long-term investment.
Challenges of the transaction included:
• A tertiary market
• Property in lease up
• Short time period of ownership.
Solutions arranged by TMG that made this a great loan:
• Utilized the in-place income
• Closed in less than 30 days
• Recapitalized borrowers for other projects
• No pre-pay penalty.
“The borrowers have a great long-term plan for this and their other local properties,” said Jeff Meierhofer, TMG’s director of Finance. “We knew it needed to be a two-step process to help them achieve their long term goals. The loan allows them to get a non-recourse loan in the next year for their long-term strategy.”
The financing was arranged by Jeff Meierhofer at The Madison Group.