Unlocking Optionality: A Customized Financing Solution for a Prime Asset

Problem
We had a long-term relationship client that needed help in a dislocated finance market with a prime old town asset that they needed a short-term solution on. The crux of the deal was that one of their core funds was sunsetting and instead of selling the assets in a weak market or carrying it at a high amortizing interest rate, they wanted to see what optionality ECM could provide that would enable them to refinance the asset at a zero sum cost but give them pricing accretion but also providing flexibility to sell into a recovering market.

Solution
Our team collaborated internally to design a structure that would meet our client’s need for flexibility. By creating a market for the asset and presenting the structure to one of our correspondent lenders, we recognized that offering short-term, interest-only financing with flexible prepayment terms was essential to ensuring the deal’s economic viability and maintaining the asset during a downturn.

Outcome
We were able to get our client a non-recourse, short term 36-month, interest only deal with prepayment flexibility at 125 Bps inside of the incumbent mortgage provider. This allowed the sponsor to extrapolate themselves from the current lender, provide cashflow for their investor base, while giving them the opportunity to hold onto a prime well-located asset until the market fundamentals were right for a sale.