$13,500,000 BRIDGE LOAN FOR A MULTIFAMILY PROPERTY IN ORLANDO, FL

Continental Partners arranged the $13,500,000 first mortgage debt financing for a 272-unit Class C multifamily asset located in Orlando, FL.

Transaction Details

Loan Amount: $13,500,000
Rate: 5.25%
Term: 3 Years
Amortization: 3 Years I.O.
LTC: 80%
DCR: 1.20 On Stabilized NOI
Prepayment: 18 Month Lockout, 2%Month 19-24, 1% 24-30, Open Last 6 Months
Recourse:  Non-Recourse
Lender Origination Fee: 0.75%

Mitch Paskover

Transaction Description

Summary: Continental Partners arranged the $13,500,000 first mortgage debt financing for a 272-unit Class C multifamily asset located in Orlando, FL. The transaction featured an 80% loan-to-cost, LIBOR-based, interest – only, non – recourse loan. Proceeds were used to pay off a DPO (discounted pay off) from a Lender that took over an insolvent bank and was offering the Sponsor a discount on in place debt.

Opportunity: In December 2005, the Sponsor refinanced the Property and obtained a new loan in the amount of $13,775,000 from a local bank. During this period, the local bank’s financial condition had deteriorated given the economic global meltdown and they were under severe pressure from the FDIC to become more solvent. As a result, the local bank had to follow FDIC protocol and as the loan was past maturity (even though all parties had been negotiating in good faith towards an extension), the local bank placed the Sponsor in default and a lawsuit ensued.During the period of dispute with FCB the Sponsor had to use all the excess cash flow from the Property to service the legal fees with regards to the lawsuit. Given the circumstances surrounding the lack of funds flowing from the Property, the Sponsors continued to operate the Property as best they could.

Result: The loan Continental Partners provided was from a specialized debt fund whose sole focus is non-recourse bridge loans. Continental Partners spent time explaining the previous lawsuits and summarized the situation so the Lender was able to understand the circumstances enabling them to get comfortable with the story. The Lender provided a floating rate loan to pay off the DPO and gave the Sponsor enough proceeds to renovate the Property. In addition, the Lender worked with the Sponsor in providing a flexible prepayment structure, allowing the Sponsor to sell the asset without paying any significant prepayment penalties.

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