~ Engineering Firm~
Successfully arranged an $8 million combination 1st Conventional Mortgage/SBA 504 real estate financing for our client to purchase the remaining ownership interest in their commercial property held by an investor. The client, an aerospace company located in Corona, CA, manufactures aircraft parts. BFG has successfully arranged several separate financing transactions over the years for this client, including refinancing equipment leases, financing the purchase of a 5-axis gantry machine, obtaining revolving line of credit, and financing the purchase of a 4-axis horizontal machine. All of the financing improved our client's cash flow and allowed them to successfully expand their business horizons. To successfully fund the latest transaction, we had to address the following:
1. Buy-Out Real Estate Investor's 55.56% Ownership Interest in Property.
The purchase option period and terms were unusually complex (investor is an attorney). For instance, the option to purchase could not be exercised prior to a certain date and had to be completed by a certain date. We assisted the client with navigating and understanding the option terms and had been involved with monitoring to assure the option period requirements were met. We noted early on that the property ownership was held as "Tenants in Common" insuring SBA 504 eligibility.
2. Buy-Out Accomplished Without Additional Injection by Client
We were aware that we could exceed the SBA 504 maximum allowable financing threshold because the financing met SBA public policy goals. We successfully convinced the 1st conventional mortgage lender to provide financing exceeding their published maximum loan amount by $1 million. Because we were able maximize our client's financing and convince the bank and the SBA additional equity injection was not necessary, our client did not have to provide any additional cash from the business to complete this transaction.
3. Locked-In Lower Fixed Rate Before Recent Rate Hikes and Obtained 6-Month Forward Commitment
We were able to obtain a fixed rate lock for our client before the recent increase in market interest rates. Our client's funding rate was approximately 1% below current comparable market fixed rates. Also, to accommodate the seller's 1031 exchange requirements, we obtained a 6-month forward commitment without the need for updated appraisal or environmental reports.
4. Commercial Insurance Support
Our commercial insurance affiliate, BFG Insurance Services LLC, successfully arranged Lessor's Risk insurance coverage on the commercial real estate, because the investor's existing insurance broker was not able to provide adequate coverage in a timely manner to satisfy the financing requirement.
Innovative Financing Solutions to Expand your Real Estate/Business Horizons!
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Jermal Booker (626) 256-8850
Mark Austin (626) 256-8890 or (541) 515-6379