August 2015

DEAL OF THE MONTH

Borrower Request in Georgia

Borrower signed a lease with a national bank and wanted to construct a new improvement for the bank on an existing pad site whose current improvements had been constructed for a chain restaurant that was no longer in business.


August 2015 Deal of the Month

Property Type:
100, 000 sf
Class B office/retail property

Loan Size:
$20.25MM

Closing Month:
July 2015


Challenge

Borrower signed a lease with a national bank and wanted to construct a new improvement for the bank on an existing pad site whose current improvements had been constructed for a chain restaurant that was no longer in business. Lender needed to insure the demo of existing improvements and the construction of new improvements would not constitute a REMIC violation. Lender also needed to insure that they were properly protected for the risk associated with the construction of new improvements.

Solution

Lender ultimately agreed to the execution of the ground lease and construction of new improvements.

1st Service Solutions provided the information and discussion with Lender to help conclude that the proposed transaction would not constitute a REMIC violation. Additionally, 1st Service Solutions was able to successfully negotiate reserving only a portion of landlord’s cost of construction that was acceptable to both Borrower and Lender.