Saratoga Springs, New York (PressExposure) December 31, 2007 -- Principle Commercial Corporation today announced the closing of a commercial real estate mortgage loan on two properties occupied by CVS Drugstores in Indianapolis and Portland, Indiana. Principle was the mortgage broker of record on the $3.4 million debt transaction, which funded the $4.8 million acquisition.
Melissa Alexander, Principle's account executive, said that the transaction represented a milestone for Principle because it was the first time the company had arranged financing of a credit tenant lease. Said Alexander: "This transaction was a win-win for the borrower and for us. They were able to secure a great interest rate, and we were able to quickly provide a lender for the transaction."
Fortunately, Principle's experienced underwriting department had the expertise to recognize the important aspects of the transaction and, with the lender, structure a loan that accommodated the borrower. Calvin N. Cline, Principle's underwriter on the transaction, is not new to this type of transaction. "My experience as a commercial real estate underwriter for Chase and Key Bank, as well as experience with CMBS, allowed us to quickly identify a great borrowing opportunity for the purchaser of the two CVS stores." CMBS is short for commercial mortgage-backed securities: Publicly traded bonds, which are securitized by a pool of high-quality mortgages.
Further complicating the loan request was the short time frame within which the financing needed to be consummated. The borrower needed to act quickly in order to consummate the purchase contract. And time was of the essence, since the buyer was reinvesting funds from a 1031 exchange. A 1031 exchange refers to a section of the U.S. Tax Code, which governs taxability of the capital gains proceeds from the sale of a real estate asset. Taxation can be postponed through reinvestment in a "like kind" asset.
Principle turned the deal around in less than the industry standard of 120 days by delivering an application letter from the lender in less than 15 days! The loan closed within 60 days. Commented Pavlo A. Zaderej, senior underwriter for Principle: "Our commitment to quick client responses and strong lender relationships led to an immediate and financially beneficial solution to the client's need. And the lender, B of A, got a great loan for its securitized portfolio."
The lender on the transaction was Bank of America, N.A. of Jacksonville, Florida, through its Real Estate Structured Finance division in Charlotte, North Carolina.