Owner the Key in Terrix refinance

John Richert of Terrix Financial knew what he would hear if he presented the refinance deal for the flex building in Lousiville to most lenders.

“If I called 100 lenders, 95 of them would say this isn’t doable,” said Richert, who recently arranged $5.25 million in the refinance deal of the 65,118-square-foot building with Marsha Blair in his office.

“Any life insurance company, for example, would just say, ‘Nope, nope nope,'” Richert said.

First, there was the asset class.

While it depends on the lender, flex buildings typically aren’t a favorite asset class, like a grocery-anchored shopping center would be, for example, he noted.

This single-tenant building, which is rather specialized, is especially a challenge because it is 77 percent office space, including a fair amount of lab space.

“It’s not like you have a plain-Jane warehouse that you are using just to store stuff,” Richert said.

It could be considered a risky loan because, if the tenant pulled out, “a lender could just imagine the cost of ripping out all or part of the office space,” he said.

The cost would not be recouped because warehouse space leases for so much less than office space.

The tenant itself is beyond reproach. It is a multibillion-dollar company that is extremely credit-worthy.

The problem is that tenant has less than five years remaining on its lease and short-term leases make lenders nervous.

Because the space is perfect for the tenant, Richert expects the tentant will be there for quite some time.

“I just think it is the company’s policy not to sign long-term leases,” he said.

What the property has going for it is the owner, he said.

“I knew I had to find a lender that would focus more on the borrowers than the real estate,” Richert said.

“He is not Warren Buffett, but he is very strong financially,” Richert said. “This is a very big borrower.”

He presented the deal to three lenders and “all three quoted on it.”

The borrower took the best offer from a local bank. The loan carries an interest rate of 33 percent that is fixed for five years and amortized over 25 years.

“It is just an unbelievably great loan,” Richert said.

SOURCE: by John Rebchook, , Colorado Real Estate Journal

Terrix arranges $43 million in loan for California deals

Kevin Chadwick and Rick Oleson of Terrix Financial arranged $42.94 million in acquisition financing for three apartment communities in Walnut Creek, Calif.

The three communities have a total of 358 units.

In the single largest deal, Terrix arranged $18.4 million for 152 unites in six buildings in a garden-style apartment complex constructed in 1964.

The floating rate on the loan is adjusted monthly and has an initial rate of 3.89 percent. It also has  seven-year term and is amortized over 30 years. The smallest of the three loans was for $11.66 million for 99 unites constructed in 1962.

The iniital rate in the floating rate loan is 3.39 percent. The terms are the same as they are for the other two loans.

The borrower is a private limited liability company that previously bought apartments in the Denver area.

“When they bought stuff locally here is how I met them,” Chadwick said. “They are California-based and while they might still own a property in Denver, they are now concentrating on the California market.”

Chadwick and Oleson chose the Fannie Mae lender through a competitive bid process.

The lender is based in New York and has a strong relationship with Terrix.

A lot of lenders were interested in funding the three transactions, Chadwick said.

“They like the area, they like the buildings and they liked the borrower,” Chadwick said.

“The borrower is very experienced,” Chadwick added. “Their equity partner is a huge fund. It is kind of a household name. The fund counts on local groups for their local expertise.”

Also, the deals were not highly leveraged.

“They were all 75 percent to 80 percent loan-to-value deals,” Chadwick said.

SOURCE: by John Rebchook, , Colorado Real Estate Journal