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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.

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