The Madison Group (TMG), a leading source of Industrial
financing nationwide, arranged the $2,000,000 refinance loan for an
industrial property in Utah. The borrower’s goal was to re-capitalize with a
long-term loan after making a purchase with a tax-deferred 1031 exchange and
cash. The finalized terms of this loan were 4.83% interest rate on a 65% LTV
with a 10-year fixed term and a 25-year amortization.
The borrowers were able to act quickly when the property
became available in 2017 and used cash and a 1031 exchange for the purchase.
This allowed for an aggressive purchase price on an excellent industrial
location. The borrowers are now able to
recapture cash and benefit from lease escalation over the fixed 10-year term
loan.
The property has three buildings with 25,205 square feet on
two parcels with a total of 7.5 acres.
The buildings are considered single-tenant with only a small portion
occupied by a third-party tenant. The
current tenant is a quality tenant with a long-term lease, although not a
credit tenant. The property is in a very strong industrial location in metro
Salt Lake City.
The borrowing entity is a Tenant In Common (TIC) with two
LLCs. They desired a non-recourse structure to accommodate the underlying members
of the different entities.
The property has excess land that is included in the lease
rate which was unacceptable to many lenders. There were also some remaining
tenant improvements and roofing repairs that needed to be completed. TMG and
the lender worked to mitigate these issues to satisfy the requirements of
underwriting.
“Most loans have some quirk or challenge,” said Jeff
Meierhofer, TMG’s director of Finance. “Our lender’s ability to include the
excess land in the value and move past the TIC structure satisfied the borrowers’
needs. Locking in the application saved the borrower from a lot of anxiety in a
roller coaster rate environment,” Meierhofer said.
The financing was arranged
by Jeff Meierhofer at The Madison Group.