Fident Capital secured a $9.8M bridge loan for acquisition and condominium conversion of a 54,000 square foot medical office building located in Gilbert, Arizona.
The property was built in 1986 and received a complete exterior rehabilitation in 2006. Upon acquisition, building occupancy was at 78% with a mix of long- and short-term tenants with rates at and below market value. The seller disposed of the property at a market cap rate based upon in-place cash flow. The borrower saw upside in placing a condominium map on the property, selling the space leased to long-term credit tenants and holding the remaining space for long-term investment.
Project challenges included a sponsor who was a relatively new entrant into the office condo space with a credit history not easily understood by banks and a need for a quick close. Additionally, the business plan needed to be validated in terms of retail pricing, rehabilitation costs, and absorption rates.
A private lender funded the deal at 81% loan-to-cost on an 18-month term with a six month extension available. No presales were required.