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DALLAS-Lincoln Property Co. and Pacific Coast Capital Partners LLC have secured $28 million in after-the-fact acquisition financing, setting up a reserve pool for upgrades and leasing and an early-out should the 282,950-sf class A office building be sold during the note’s three-year term. The loan closed within 30 days of the application crossing the lender’s desk.

Lincoln and El Segundo, CA-based Pacific Coast acquired the 15-story office building at 10000 N. Central Expressway in late December. Robert Stone, vice president of Capmark Finance Inc. in Dallas, says loan talks began shortly before the acquisition was closed, but went silent until after the deal was done. Once the buyers resumed loan talks, he says Capmark cleared the three-year, interest-only loan within 30 days. John Brownlee, senior managing director in Dallas for Holliday Fenoglio Fowler LP, arranged financing for the borrower of record, PCCP LLC.

Stone can’t disclose the interest rate, but did say it’s a Libor-based floater, a move tied to the building’s 55% occupancy at closing time. As they packaged the financing, occupancy rose to nearly 70% with the Dallas-based Lincoln team bedding down 40,000 sf in several deals, according to Stone. Lincoln didn’t return telephone calls by deadline to discuss the new leases.

“It wasn’t too difficult to do it, but it required some pretty detailed loan structuring,” Stone tells GlobeSt.com. “With the significance of Lincoln Property and their partner, Pacific Coast Capital, we were able to structure a deal that was creative, pretty aggressive for the market and met the criteria they needed.” The loan-to-value ratio also is being kept under wraps, but Dallas Central Appraisal District has a $21.85-million assessment levied against the 23-year-old building, which the JV bought from a Houston-based limited partnership.

Stone says the reserve will be released as needed for approved leases, covering tenant improvements and leasing commissions plus common-area upgrades to the building and 2.26 acres of grounds. “It’s a fantastic building. We feel like there’s a significant amount of real estate activity in that area and that the building would lease up quickly based on the lease-up strategy that the borrower had–aggressively marketing the building and making deals,” he says.

Stone says the floater is structured to roll to a fixed-rate permanent loan during or as the three-year term draws to a close. “It is structured conservatively to underwrite for a permanent loan once we reach stabilization,” he explains. “They have the ability to shop, but we hope they’d like to do it with us or they can sell it.” And selling, he adds, isn’t a remote possibility.

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