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FONTANA, CA-Steadfast Properties of Newport Beach has secured a $7.1-million bridge and mezzanine loan via Newman Financial Services’ Structured Products Group (SPG) for the acquisition and lease-up of the 202,500-sf Marlay Building. Newman reports that the borrower bought the property with plans to hold it though the expiration of the current lease and then either lease it to a single user or sell it to an owner-occupier. The project also includes about $250,000 in renovations to the property, which Steadfast acquired for $7.9 million, with SPG’s loan representing 90% of total costs.

Jay Rollins, Denver-based managing director of SPG and SVP of Newman Financial Services who arranged the financing, reports that the $7.1 million was structured as a bridge loan of $5.5 million and a mezzanine loan of $1.6 million. Initial funding was approximately $6.5 million, with the remainder of the proceeds to be used for renovations and interest carry while the property is vacant. The interest-only, floating-rate debt was priced over 30-day Libor and has a blended pay rate of just over 3.2%. The debt carries a 12-month term with options to extend, provided the property meets certain requirements.

The 202,500-sf property, built in 1988, features approximately 10,000 sf of office improvements, a 26-foot clear height, 42 dock high doors, 210 surface parking spaces and a truck loading area. At closing it was 100% leased, but the tenant intends to vacate the building when the current lease expires this month. The building has served a single-tenant facility since its construction, but Rollins notes that it is divisible for use by two separate tenants.

Rollins comments that the SPG liked the acquisition price and market location aspects of the transaction. “While there is an inherent risk in financing an effectively vacant building, SPG was able to get comfortable with this transaction though its existing and successful relationship with the borrower, as well as the market demand for this type of product,” Rollins says.SPG specializes in value-added transactions involving multifamily, office, retail and industrial through bridge financing, mezzanine financing and other structured financings.

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