Mixed Use

Buying Time: Swift Intervention is Key

Background

The property is a mixed-use property located in a highly visible and desirable coastal community in Florida. Upon the referral of a mortgage banker, the Owner sought The Henley Group’s help in negotiating an extension on his maturing loan.
Challenges

  • The property Owner was unable to pay-off the property’s loan at maturity due to a 20% tenant vacancy and was hoping to negotiate a loan extension
  • Because this property exceeded the value of the loan, there was a risk that the Lender could choose to foreclose on the property and get sufficient value to retire the loan

Goals

When the Henley Group became engaged we were able to distill the Owner’s goals for a focused approach:

  1. Negotiate a loan extension that would buy the Owner time during which he could explore one or more of the following options for his property:
    • Work deals with potential tenants without pressure to make quick decisions that may not be in the best interest of the property
    • Refinance the property
    • Sell the property
  2. Negotiate an extension with the existing Lender (refinancing with another Lender would require additional costs).

Execution

Given the property’s circumstances–high visibility, desirable location, vacancy, and value–The Henley Group intervened and engaged the Lender, quickly. (Recall, there was the risk that the Lender might choose to foreclose and leverage the value of the property). By acting swiftly, we knew that we could help mitigate this risk by eliminating any additional lag time during which the Lender might mull over other options less desirable to the Owner.

Outcome

The Henley Group engaged on February 28th and within 60 days had successfully negotiated a multi-year extension of the loan (with the existing Lender) with minimal transaction costs to the Borrower.
One year after THG negotiated the multi-year loan extension, CBRE—a nationally known commercial real estate company–negotiated a sale of the property for a significant gain.Conditions of the sale included retention of the owner as property manager.

Have a maturing loan in a similar situation? Contact The Henley Group for help engaging your Lender in a meaningful dialogue on your behalf.