In a challenging Northern California deal, Barry Slatt Mortgage banker Rich Davidson has arranged a $6.5 MM mortgage for the Sand Hill Property Company on a 14,500 sq. ft. newly constructed Walgreens Drugstore property located in San Jose. Correspondent lender EverBank provided the 10-year permanent loan, which was used to pay off a construction loan that Barry Slatt Mortgage affiliate 3MD Financial provided last year.
This loan presented a number of significant challenges. Walgreens was terminating a lease on a nearby building and moving into the new location. Subsequently timing on the construction was important, as was the timing on the takeout funding in order to realize savings on interest and loan fees.
The borrower was seeking a long term fixed rate to take advantage of the historically low interest rates, but also required flexibility in the ability to prepay the loan in the event of an all cash sale. Most lenders offering long term fixed rates do so with either defeasance or yield maintenance prepayment penalties—EverBank was able to provide an assumable loan with a specific declining prepayment penalty that starts at 5% in year one, and declines to 1% in year five.
EverBank further accommodated the borrower with a very creative pre and post-closing loan structure that will allow the borrower to satisfy several lending conditions after the loan closed.