SBA-504 ACQUISITION LOAN OWNER/USER OFFICE

• Capital Source: SBA-504 & Participating Bank
• Purpose of Loan: Acquisition (Purchase + Capital Improvements)
• Loan Amount: $5,879,999
• LTV/LTC: 90%
• Rate: 4.25%*
• Term: 10 Years
• Amortization: 25 Years (Initial 18 Months of IO)
• Prepayment: Stepdown
• Recourse: Full

Transaction Details:

Tower Capital recently arranged a $5,879,999 (90% LTC) acquisition loan for the purchase of a +20,845 square foot (SF) freestanding office building located in the heart of the Arcadia neighborhood of Phoenix, Arizona. The sponsor is an extremely reputable local personal injury law firm who will utilize the premises as their new Arizona headquarters. The law firm intends to make significant capital improvements to the property prior to taking occupancy sometime within the next 12-18 months.

The subject property boasts prominent street frontage along one of the busiest thoroughfares in Arcadia and houses numerous existing tenants. The sponsor will occupy the majority of the subject property, while also taking advantage of in-place cash flow from several current tenants with staggered lease expirations. The law firm, in conjunction with their team of GC’s, architects, engineers, etc., will build out “Class A” space for the premises the law firm will occupy, along with making other accretive improvements to the building. The expansion into the new, larger space will allow the law firm to continue to grow additional market share and serve as their new headquarters to house their growing and successful operation.

Tower Capital, through a wide marketing campaign, was able to procure a local bank to provide an interest well below the current market on a promotional basis given the strength of the sponsor and quality of the asset. The fixed-rate, maximum leverage loan provides the sponsor with an initial 18-months of interest-only payments, helping offset capital costs associated with the renovation and move-in process. Additionally, the SBA-504 program which provided 90% LTC to the borrower, allowed for minimal sponsor equity injection at closing. The Tower team was able to successfully facilitate the closing over a week prior to the scheduled Close of Escrow and identified a regional bank who executed on an office transaction amidst bank failures, volatile treasury rates and related indexes, and other headwinds in the capital markets.