June 2015

DEAL OF THE MONTH

EB-5 Loan

The property is a large, anchored retail center that was performing. There was one large tenant that had vacated and a new replacement tenant had been identified


June Deal of the Month

Loan – $46.2MM

Origination date – June 2010

Maturity date – June 2015

Appraised amount – $48MM at maturity; anticipated to be $55MM at time of extended maturity


Challenge

  • The owner had obtained an EB-5 loan in 2010 with a 5 year term
  • At the upcoming maturity date, although the value of the property was slightly greater than the loan amount; it was not enough to get a new loan sufficient to pay the existing EB-5 loan off
  • After the replacement tenant was in place, the property value would support a total refinance
  • Without assurance of an extension, the owners were not willing to fund the tenant improvement and leasing commission required to secure the new tenant
  • The owners had approached the EB-5 lender for an extension and were turned down
  • In an EB-5 loan; similar to a CMBS loan; part of the challenge is in recognizing that there is no “lender”. It is critical to understand all the parties, who holds the approval rights and ultimately what their primary objectives are

Solution

1st Service Solutions analyzed the situation and then put together a compelling write up to support the benefit to the EB-5 investors of the one year extension.  1st Service Solutions was also able to provide the industry standard terms for this extension to the owners and eventually the owners, EB-5 investors, EB-5 lender and attorneys were able to agree on a plan that will allow all parties to ‘get out’ whole.