"I'm not sure if you could get a deal like this done again today," says Emrani, who arranged the financing along with co-mortgage broker Sam Kermanian, president of Beverly Hills-based Parklane Investments, and vice president Anna Saucier of GSP. The deal, which was one of the last large commercial loans closed by Washington Mutual before its takeover by the FDIC, also featured a quick close on defeasance that was necessary to make it work.
"This was really a remarkable loan to get done under current market conditions," Emrani says. "Usually, lenders today want full recourse, so it was very unusual to negotiate only 25% recourse." Almost no lenders want to do large cash-outs like this today, the interest rate was very good and the other terms of the loan were favorable to the borrower as well. The 10-year term loan is fixed rate for the first five years and floating for the last five, amortizing over 30 years. The deal closed at a loan-to-value ratio of 58%and a debt coverage ratio of 1.25.
Emrani says that the borrowers plan to use the cash-out for new investments, expecting to see some attractive opportunities in the next year or two. He and the other team members on the loan were working on the deal for three or four months before the FDIC's takeover of Washington Mutual. "We were able to get a commitment letter the day that the FDIC took over Washington Mutual," he says. He says that the team knew it had to move quickly because of changes that would occur after JP Morgan Chase took over. Washington Mutual's large loan program is no longer active, he notes, and this deal was one of the last of its kind before the program was suspended.
The Beverly Hills property is an 11-story, 99,904-sf office building that was built in 1964 and is 100% occupied year-in and year-out. Emrani tells GlobeSt.com that the there is a waiting list of tenants that want to lease space in the building, where the owners keep rates below market and maintain the building in excellent condition in order to keep it at 100% occupancy.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.