The Anatomy of Deal
A deep dive into a recently funded commercial loan.
Traditionally, this space has been used to address big picture trends and topics in real estate from the perspective of a commercial lender and loan underwriter. This month we have elected an opposite approach with a deep dive into a recently funded deal.
In early December, a local developer and commercial property owner came to Juniper while under contract to purchase a hospital and medical office building in Yakima, WA. The property was being purchased out of bankruptcy, resulting in a great price for the client, but a firm timeline for closing as well. The client had previously been working with another private lender who had required a large upfront fee, but now had informed the client they would not be able to perform by the bankruptcy court’s appointed closing date.
Digging in to underwrite this loan request uncovered some relatively obvious strengths and weaknesses.
- Borrower’s experience and track record developing and managing commercial real estate throughout eastern Washington
- Borrower’s significant down payment on the property – over 50% of the purchase price
- A highly desirable medical office building with lease LOIs already in place
- Timing – only two weeks to close
- Tertiary property location
- A highly specialized property with a limited number of potential operators
- Nearly 300,000 sf of vacant hospital space presenting significant upkeep expenses
With time of the essence, Juniper’s underwriting team was able to quickly connect with multiple brokers familiar with the medical and office markets in Yakima who were able to provide opinions of value (BOVs). It is our belief that a BOV from an experienced broker is a more accurate indication of a property’s value than an appraisal. Ultimately, we want to know what a collateral property will sell for from someone selling that class of property in that region. This allows Juniper to make quick, confident funding decisions while saving our clients both time and money in comparison to an appraisal.
In commercial real estate finance, deals rarely come together from start to finish without a few curveballs. In this case, after completing underwriting and approving the loan the client came back to request an additional $1.2MM CapEx reserve for the maintenance and improvement of the hospital property. While not always the case, here the client’s significant cash investment into the purchase allowed us to reapprove the higher loan amount less than a week prior to closing.
Three separate sets of attorneys added an additional layer of complexity to this loan funding, but we were able to leverage our in-house counsel to navigate several unique technical challenges and bring the $8.8MM loan to the funding table on time, just two weeks after fielding the client’s initial inquiry.
No matter the size or complexity, if you are facing a tight deadline or a bank that just cannot think far enough outside the box to get your deal closed, let Juniper’s experience and expertise get you to the finish line – give us a call to start the conversation today.
At Juniper Capital, we are proud to provide private real estate financing for commercial, multi-family residential, investment residential, fix and flip, land, construction and investment grade real estate loans throughout Seattle and the Northwest. As a direct private money lending company, Juniper Capital is ready to lend when opportunity knocks, and our team is here to help you finance your next real estate project. Give us a call to talk to one of our experienced loan officers and start the conversation today.