A/B Loan Bifurcation – California Retail Center

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A/B Loan Bifurcation – California Retail Center

A/B Loan Bifurcation

 

Property: Retail Center in California Loan Balance: $27 million

 

Problem: The grocery anchor in this retail center went dark. The current value of the property was $12 million and it was likely that the value would recover by maturity date in 2017. New capital of $3 million was required for a modification, and the borrower did not have the full amount.

 

Solution: The borrower contributed $1 million of new capital required for modification, and a REIT stepped in to provide the remaining new capital. The remaining $15 million of the loan was placed in a B note (hope note) with no interest accrual. This solution resulted in a win for the REIT, a win for the current borrower because the loan stayed in place and tax consequences were avoided, and a win for the Trust with no immediate losses.

Skills

Posted on

January 14, 2014