ORLANDO, FL, Sept. 9, 2011 – Marcus & Millichap Capital Corporation (MMCC) has arranged a $4.8 million loan for the acquisition and build-out of a retail neighborhood property in Orlando.Michael Balan (top right photo), a director in MMCC’s Miami office, arranged the financing.
“Commercial real estate purchases are usually either investment or owner-occupied; seeing both types together is unusual,” says Balan.
“Part of this property will be an owner-occupied entertainment concept, but other retail tenants will remain. The buyer was unable to obtain a loan because he attempted to finance the purchase solely with an SBA loan,” adds Balan.
“The problem with using an SBA loan alone was that the buyer has no experience with the concept he’s creating and experience is critical for an SBA loan,” continues Balan.
“MMCC arranged for the buyer to receive a conventional loan to purchase the investment portion of the property and an SBA loan to cover the purchase and build-out of the owner-occupied portion.
“Our structure reduced the size of the SBA portion of the loan by making nearly half of it a conventional loan with separate collateral,” Balan goes on. “By doing that, we were able to reduce the importance of the borrower’s experience by reducing the SBA’s exposure.”
The conventional loan is fixed for 10 years with amortization over 20 years. The LTV is 60 percent. The SBA loan is fixed for 20 years with amortization over 20 years. The LTV of the SBA loan is 85 percent
“We were able to get the conventional loan done with a very short term remaining on the tenant’s lease,” Balan adds.
“It’s an ideal location and the buyer got a great price because he’s essentially buying at the bottom of the market. Most banks would not consider a loan on a single-tenant property with a short lease, in spite of the location or the cost basis,” says Balan. “I give credit to the lender for having the confidence to do that.”
Press Contact: Stacey Corso, Marcus & Millichap Capital Corporation, (925) 953-1716
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