DLP Case Studies
Loan Secured by a Creative Office Building (San Francisco, CA)
Collateral: The Property consists of 28,839 net rentable square feet of creative office space and a 16-stall garage in a historic warehouse originally constructed in 1874 and converted to office space in 2000 with additional tenant improvements in 2010. The Property is also entitled for the development of a 74-unit residential seven-story condominium tower above two levels of above-grade parking which would be camouflaged behind the historic warehouse façade. The loan is further guaranteed by a 779 SF commercial retail condominium in a residential condominium building.
Opportunity: In September 2007, Borrower acquired the Property for $9,568,000 with a twelve month term $7,568,000 land loan, intending to construct a condominium tower. Borrower filed for bankruptcy at the end of the term after efforts to refinance into a construction loan were unsuccessful. The bankruptcy resulted in a loan workout which included a 2-year extension and forbearance agreement with the lender. The Borrower also deposited an executed grant deed into escrow as further assurance of land loan repayment. Borrower believed that if lender was not paid in full by January 3, 2012, lender would be entitled to record the deed and become the owner of the Property. Borrower approached Bolour Associates seeking a bridge loan with a one year term to re-market and sell the Property in 2012.
Results: On December 30, 2011, Bolour Associates funded its bridge loan to the borrower after a one week due diligence period. Bolour Associates funded $7,900,000 toward the refinance of the land loan. The interest rate is 12% for one year. The origination fee was 5% of the loan amount. The Borrower intends to re-market and sell the Property in 2012.
Loan Secured by a Fractured Residential Condominium (Oceanside, CA)
Collateral: The Property consists of 25 unsold residential condominium units containing 29,489 square feet in a 33-unit, 5-story former office building which underwent an expansion and residential conversion in 2007.
Opportunity: Borrower contacted Bolour Associates in early November initially seeking to refinance the entire $8.3 million construction loan, remove the Property from receivership, and avoid the foreclosure auction.
Results: Bolour Associates agreed to lend $5.7 million, requiring the sponsors to bring $2.6 million to closing to pay off their construction loan. In addition, Bolour Associates required that the sponsors provide additional collateral in the form of a second trust deed on a 22,750 square foot office building in Huntington Park, CA. The interest rate is 11% for one year. The origination fee was 4% of the loan amount.
Loan Against Loan Secured by Unanchored Retail Strip Center (Sacramento, CA)
Collateral: Unanchored retail strip center constructed in 2007 with 32,000 SF (43% occupied/50% leased) and located in the “Little Saigon” neighborhood of Sacramento. The loan is further guaranteed by the entity which owns a 232-unit, Class B apartment complex in Sherman, TX and an additional entity which owns a 4.27-acre estate lot in a gated community in Murrieta, CA.
Opportunity: Borrower approached Bolour Associates seeking to finance the acquisition of the note secured by the Sacramento shopping center which Borrower’s son owns and developed at a cost exceeding $5.2 million. The shopping center was delivered at the beginning of the recession and leasing was further hampered by a mid-block location on a divided highway and poor configuration with limited visibility for the majority of the center. Borrower will foreclose on son and new, lower basis will enable Borrower to lease space at substantially lower rents than targeted in the original proforma.
Results: The Borrower intends to refinance of the Sherman property which will likely generate sufficient cash out to repay the Bolour loan. Borrower requires the bridge loan to fully document all of the Sherman rental collections to maximize the loan proceeds from the refinance. Borrower can also begin aggressively leasing shopping center and finalize lease with Laundromat for 7% of the space which was impeded by bank’s unwillingness to provide an SNDA.
Loans Against Multi-Family and Mixed-Use Buildings (Laguna Beach, CA)
Collateral: Apartment building with 13 units and mixed-use building in Laguna Village with 10 residential units and 2 commercial suites in the Gallery Row section of North Laguna.
Opportunity: Borrower approached Bolour Associates seeking to refinance two properties to resolve liens stemming from inheritance taxes. Borrower sought conventional financing but had not been properly documenting income making the buildings ineligible for CMBS or agency financing at this time.
Results: The Borrower will have a twelve month term and optional six month extension to file 2010 and 2011 income taxes and fully document the property income and expenses. The Bolour loan was sized to maximize proceeds required to resolve the Borrower’s lien situation while also taking care to keep leverage consistent with the estimated proceeds from the agency refinance. Bolour Associates funded $6,100,000 toward the refinance of the existing loans and tax liens. The interest rate is 11% for one year. The origination fee was 4% of the loan amount.
Loan Against Former Car Dealership (Culver City, CA)
Collateral: 17,500 SF vacant former vehicle showroom/repair building on two acres at the intersection of two major arteries in Culver City, California.
Opportunity: Borrower approached Bolour Associates seeking acquisition financing for an environmentally contaminated property which he had targeted for conversion into a neighborhood retail center. The Borrower’s purchase and sale agreement with seller had expired while Borrower conducted due diligence of the environmental issues. Borrower attempted to re-enter a purchase agreement but seller required Borrower to make a non-refundable deposit of $500,000 without a new due diligence period. Borrower required surety of closing once the deposit was made to seller which Bolour Associates provided by funding into escrow prior to closing on the acquisition.
Results: The Borrower was able to negotiate a $750,000 discount on the purchase price because of Bolour Associates’ ability to close within 3 days of reinstating the purchase and sale agreement. Bolour Associates performed its own assessment of the environmental issues and concluded the remediation plan and costs were well founded. Bolour Associates funded $5,200,000 toward the purchase price. The interest rate is 11.5% for one year. The origination fee was 4.5% of the loan amount. The loan is non-recourse except for standard carve-outs.
Loan against Unanchored Retail REO (Henderson, NV)
Collateral: 15,000 SF vacant unanchored retail building, pad for 6,300 SF of additional unanchored space, free-standing Taco Bell, and pad for additional free-standing building with drive through, built in 2007.
Opportunity: Borrower approached Bolour Associates on February 1, 2011 for a loan to acquire the property plus additional funds for tenant improvements and leasing commissions. The Borrower had executed leases for 90% of the unanchored retail building space.
Results: Bolour Associates issued a Letter of Intent to Borrower to lend a total of $2,600,000 which included $2,000,000 of acquisition funds, $400,000 to fund a tenant improvement reserve and $200,000 to fund an interest reserve. Bolour Associates conducted thorough due diligence on the Borrower and the property, closing the transaction in 9 business days. The interest rate is 12.5% for one year. The origination fee was 4.5% of the loan amount. The individual principals of the Borrowing Entity personally guaranteed the loan. At stabilization, the asset is estimated to be worth approximately $5,350,000.
Acquisition Loan against Multi-Family Complex (Houston, TX)
Collateral: 612-unit Class C apartment complex in Houston built in 1973.
Opportunity: Borrower approached Bolour Associates in November 2010 for a loan to exercise a purchase option on a multi-family property he had been managing for five years. Borrower cued up conventional financing with a DUS lender to close on the acquisition prior to the maturity of seller’s mortgage and expiration of the purchase option. The lender withdrew its financing after discovering the property needed $500,000 of immediate repairs.
Results: Bolour Associates issued a loan for $6,500,000 plus $250,000 in matching funds for renovations. The interest rate was 9.75% over the Prime Rate for one year, with a six-month extension option upon payment of an extension fee of 1.5% of the loan amount. The origination fee was 5% of the loan amount. The individual principals of the Borrower personally guaranteed the loan. The loan is currently performing.
For more information about the DLP, please contact Elliot Shirwo at (323) 677-0550, extension 102, or elliot@bolourassociates.com.
* The foregoing transactions are representative of certain past transactions only and may not be representative of future transactions. Results of past transactions are no guarantee of future performance or returns.
