Case Studies
Case Studies
Every property presents unique challenges and opportunities; here’s how we get clients to the closing table
Case Study #1: Charleston Plaza
Location: Mountain View, CA
Loan: $40,000,000 10/30
Lender: TIAA
PROPERTY DESCRIPTION: This under-construction community shopping center featured several big-box anchor tenants. The owner/developer had promised investors pro forma financing, requiring a specified interest rate or less. The market was volatile, and he was motivated to tie down take-out financing well ahead of project completion.
CHALLENGES: With a $40 million loan, the pool of candidate lenders willing to commit on a forward basis was limited.
OPPORTUNITIES:
- Outstanding location, next to Costco
- $40 million investment opportunity
- Household-name tenant list
Joe Andrada identified potential lenders, and the owner/developer accepted the most-favorably quoted terms. In managing the process, Joe communicated with all parties, including their legal advisors, and orchestrated the many details to ensure a successful closing.
AT THE CLOSING TABLE: The financing closed on schedule, in accord with all pre-negotiated terms.
Case Study #2: Cherry Chase Shopping Center
Location: Sunnyvale, CA
Loan: $6,000,000 10/25
Lender: Cuna Mutual
PROPERTY DESCRIPTION: This 71,000-square-foot neighborhood shopping center featured a Safeway supermarket as the anchor tenant, plus multiple small businesses. An older shopping center, it boasted a 30-year history of stability. The owners sought a new loan to repay maturing debt.
CHALLENGES: The supermarket’s lease would expire in 5 years. Just one mile away, a new 55,000-square-foot Safeway was slated to open. Potential lenders were concerned Cherry Chase Safeway would move once its lease expired, and viewed this as a potential threat to the shopping center’s stability.
OPPORTUNITIES: Joe Andrada needed lenders to understand the actual dynamics of the property. Therefore, he:
- Conducted in-depth analysis of the trade area’s sales including number of homes, average expenditure per household for food and beverage, average household income, and more
- Concluded there was significant revenue potential for Cherry Chase Safeway (local food and beverage expenditures were about $150 million a year)
- Determined the grocery store’s volume of sales was quite high while its occupancy costs were low, suggesting significant profit by Safeway
In the detailed packet for potential lenders, Joe and his team highlighted:
- The shopping center’s full occupancy, its 3 decades of stability, and the limited competition in the primary trade area
- The likelihood Safeway would continue as the anchor tenant, given the store’s sales level, profit margin, and revenue potential
- The low loan request versus the property’s appraised value
AT THE CLOSING TABLE: The lender commented that he had agreed with Joe’s recommendation to finance this retail center, because the continued stability of the asset was well supported.
Case Study #3: La Cañada Building
Location: Los Gatos, CA
Loan: $6,100,000, 15/15
Lender: Lincoln National Life
PROPERTY DESCRIPTION: A charming, brick building with noted historical significance, this mixed-use commercial property is the dominant building in downtown Los Gatos, California. Owned by one family for nearly 85 years, the building’s owners sought financing because they needed cash for modest renovations.
CHALLENGES: Constructed in 1875, the building sustained substantial damage and reconstruction after the 1989 earthquake. Key challenges to place financing were the building’s age and demonstrating its structural integrity.
OPPORTUNITIES: In his report to potential lenders, Joe and his team presented analysis to:
- Demonstrate the long and stable income stream in this desirable, high-end community
- Prove the building’s structural integrity (the building met current earthquake codes)
- Show that the market value of the property covered the loan by two times
AT THE CLOSING TABLE: Since Joe works on behalf of both parties, he was able to uncover terms that pleased everyone: a 15-year fully amortizing structure. The lender recognized the stability of the income stream through time. The property owners appreciated Joe’s guidance throughout the process – and they closed on a 15-year loan at an extremely low interest rate.
Case Study #4: Temperature-controlled warehouse
Location: Fresno, CA
Loan: $30,000,000 10/25
Lender: AEGON Realty Advisors
PROPERTY DESCRIPTION: This new 570,000-square-foot warehouse boasted state-of the-art technology. The owner/developer sought financing to retire an existing construction loan.
CHALLENGES: While 100% of the building was leased, 40% was leased to a start-up transportation company, whose long-term viability was in question. Given the substantial loan request for this huge commercial property, Joe Andrada knew this could limit lenders’ interest.
OPPORTUNITIES:
- The major tenant, an international pharmaceutical company, had signed a long-term lease, which offered financial stability.
- This stable income provided 60% of the revenue and covered a major portion of the operating expenses.
AT THE CLOSING TABLE: The selected lender, an international life-insurance company, fully understood the positive characteristics of the property as well as the risks. Terms were agreed upon and a successful closing ensued.