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Successful Closing - $20,700,000 Bridge Loan for a Medical Center in Utah

Thursday, Aug 16, 2018
by Jeff Meierhofer

The Madison Group (TMG), a leading source of commercial real estate financing nationwide, arranged the $20,700,000 bridge loan for a triple net lease medical office in Utah. The property consists of a 44,594 square-foot medical center with 8 units well located in the Salt Lake City metro area.  The finalized terms of the bridge loan were interest-only payments for the first 12 months at 425 basis points over the 30-day LIBOR (London Inter-bank Offered Rate). The property owners were able to achieve a 94% loan-to-cost loan.  

A credit tenant (BBB- credit grade) currently owns the businesses in four of the units and has signed a 15-year lease on each of these.  The investment group needed a rate and term refinance of the construction loan to meet their loan maturity date. TMG was able to fund the loan within days of the deadline on this multi-tenant medical facility.

The tenants began taking occupancy in February 2018. The goal of the transaction was to pay off the construction loan by using the current in-place leases, while taking the time necessary to finish tenant improvements and move to stabilization of the net operating income for a future long term non-recourse loan.  Three of the tenants have not yet finished the improvements in their space and one space is vacant.

The timelines for completion of the construction on the project were longer than expected due to architectural changes to the plans, which created a need to close before final leases began. TMG worked closely with the lender to maximize proceeds to pay off underlying construction debt and some return of capital to the owners. TMG and the developer worked with the building owner and tenants to provide a high loan-to-cost loan and a 72% LTV.  

 Everyone needed to be on board to get the transaction completed in a timely manner,” said Jeff Meierhofer, TMG’s Director of Finance.  “We look forward to getting a new cash-out loan for them upon final occupancy.

“There were lots of moving parts on this transaction, but we were able to deliver an excellent product to the investors,” said Angela Kesselman, TMG’s Associate Director of Finance.  “Because three of the tenants had not finished their space, the project became ineligible for a Commercial Mortgage-backed Securities transaction.  Once the tenants move in, we can finalize the transaction with long-term CMBS financing and recapitalize the project.  The bridge loan was a perfect way to achieve everyone’s long-term goals, ”Kesselman said.

The financing was arranged by Jeff Meierhofer and Angela Kesselman at The Madison Group.

The Madison Group (www.madisongroupfunding.com) is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including:  multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States.  Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital.  TMG works efficiently and effectively to get the transaction closed and funded.

The Madison Group and Meierhofer can be reached at 435-785-8350 or by e-mailing Jeff at Jeff.M@madisongroupfunding.com.

Kesselman can be reached at 435-659-2200 or by e-mail at Angela@madisongroupfunding.com.

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TMG Arranges $8,680,000 Non-recourse Loan for Utah Apartment Complex

Tags: non-recourse loans, Cashout loans, Multifamily Financing
Monday, Aug 06, 2018
by Jeff Meierhofer

The Madison Group (TMG), a leading source of multifamily financing nationwide, arranged the $8,680,000 non-recourse refinance for an apartment complex in Hurricane, Utah. The borrower was interested in a non-recourse loan that allowed for cash out and recapture of cash infused into Phase 1. All equity recaptured from Phase 1 will go into the building of Phase 2. The finalized terms of this loan were 5.05% interest rate, 12-year term, and a 30-year amortization. 

The property is a recently completed 84-unit apartment community with a resort-style feel. The lease up was very fast as a gap exists for quality product in this market. Final leases have been signed on 82 of the 84 units.  The property combines the convenience of modern day living in a tranquil, quiet setting.  This apartment community features one-, two- and three-bedroom units with an amenity package well above anything else offered in Hurricane or the surrounding area.  Hurricane is in the St. George sub-market.

The total project will be a 192-unit, multi-family development consisting of two phases. The first phase, which was recently completed, includes 84 units with a pool and other amenities. The second phase is composed of 108 additional units. The project has had tremendous success in getting the first phase leased up so far. The Southern Utah market has a serious need for multi-family units.

Considering the current success in pre-leasing the property and feeling the demand was greater than expected, the borrowers are looking to move into Phase 2 construction as soon as reasonable. 

The timing of the cash out loan on Phase 1 was critical to recapitalize and move forward with Phase 2.  Special attention was paid to inter-property agreements and easements. Phase 2 is being built by the same builder and is owned by the same groups. The loan funded 90 days after the property achieved 90% occupancy.

Timing is everything in most cases, said Jeff Meierhofer, TMG’s Director of Finance. “The funds for the refinance helped the developers get moving on Phase 2 without delay saving money on construction costs.

The financing was arranged by Jeff Meierhofer at The Madison Group.

The Madison Group (www.madisongroupfunding.com) is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including:  multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States.  Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital.  TMG works efficiently and effectively to get the transaction closed and funded.

The Madison Group and Meierhofer can be reached at 435-785-8350 or by e-mailing Jeff at Jeff.M@madisongroupfunding.com.

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MHP financing

$3,395,000 loan for the purchase of a mobile home park in Kansas

Tags: mobile home park financing, MHP purchase loans, RV park loans
Wednesday, Aug 01, 2018
by Angela

The Madison Group (TMG), a leading source of mobile home park financing nationwide, arranged the $3,395,000 loan for the purchase of a mobile home park in Kansas.  The borrower’s goals were to purchase this low occupancy park using a 1031 tax-deferred exchange.  TMG secured the financing with a 5-year fixed rate of 5.57% and a 25-year amortization with a 3/2/1 prepayment penalty.

The 77-acre park is a licensed, 281-site community.  Amenities include a 23-acre lake, paved streets, public utilities, off-street parking, a two-story 6,300 sq. ft. office/community building, a workshop and a playground.

The park has 111 vacant pads and the buyers are experienced with filling this type of park and bringing in tenants.  The buyers are strong borrowers with over 30 years of experience.  They acquire under-performing assets, fix immediate issues, implement systems, upgrade the property and add new homes creating an improved family neighborhood environment for tenant longevity and stability.

Among the challenges arranging this loan faced, 111 pads are empty, requiring homes to be placed on them.  Only 59 percent of the pads have occupied homes.  The infrastructure is in place but some electrical upgrades are needed.  Additionally, two abandoned homes need some work.

TMG was able to find a lender comfortable with the client and their ability to fill the vacant lots with homes.  The client was coming out of a 1031 transaction having been very successful with that park, which was similar.  The loan closed on time, at a 75% LTV, fulfilling the buyer’s 1031 exchange requirements. 

The buyers secured a great rate and leverage on an under-performing park that just needed the right lender and buyer to allow for stabilization of the park,” said Angela Kesselman, TMG’s associate director of Finance.

The financing was arranged by Angela Kesselman at The Madison Group.

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Industrial Financing

$2 million Non-recourse Refinance of an Industrial Building in Utah

Tags: non-recourse loans, industrial financing, Cash-out loans
Monday, Jul 30, 2018
by Jeff Meierhofer

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.

Low Cost Bridge Loans

Tags: Bridge loans, commercial property bridge loans, quick loans for CRE
Thursday, Jul 26, 2018
by Jeff Meierhofer, Director of Finance
Challenges we can overcome with a bridge loan: 

?  Insufficient time for traditional loan applications

?  Delayed or turned down loan applications 

?  Short term window of opportunity 

?  The need to cross collateral properties

?  FICO score or debt-to-income ratio challenges

?  Unfiled tax returns

?  Insufficient qualifying income

?  Turn around/stabilizing cash flow

?  Zoning/project approval

Learn more about a low cost bridge loan program!
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