Tauro Capital Advisors was engaged on an exclusive basis to replace the sponsor’s floating-rate bridge loan with permanent financing. The new loan provided the owners with cash out and a fixed interest rate.
The sponsor is an experienced value-add owner and operator of retail centers. Over the last 18 months, the sponsor increased occupancy from 45% to 100% to stabilize the property. The new financing allowed for a return of capital to investors, increasing their cash on cash returns moving into the future.
The 30,000 SF multi-tenant retail center was built in 1981 and is located on the corner of a prominent intersection in Tempe, just one mile off a major freeway and close to ASU’s main campus.
- Treasury rates had been whipsawing up and down without any stability. An increase in rates would have limited loan proceeds to a lower level. The borrowers wanted to secure a loan to provide a fixed rate, cash out, and a minimal prepayment penalty.
- Tauro secured a lender that was able to lock the interest rate at application to avoid any interest rate risk throughout closing. The lender was able to provide a 3-year loan term with a minimal prepayment penalty. The loan also has the ability to extend for three year terms at market rates.
- Interest Rate: 6.25% fixed
- Initial Loan Term: 3 years
- Loan Extension: 9 extensions x 3 years
- Amortization: 30 years
- Prepayment: Yield maintenance
- Guaranty: Full Recourse