Are you a Commercial Property Owner with an adjustable-rate mortgage, a loan maturing in the next 6-12 months, or currently (or about to) enter default on your loan(s)? FCPG may be able to help.

Many property owners are feeling some pain with vacancies, slower rent growth, increasing operating costs (cough, cough insurance- jeez!), and deteriorating fundamentals in select property types, and select markets- yes, even here in FL. While there is no magic pill that will cure all pain, there are some options available that we may be able to explore to help find some relief.

Even though most lenders/banks are not lending right now (although they may claim to), there are sources of debt that are extending terms for many situations. Below are some high-level options that we may be able to assist with:

• Senior Mortgage Refinance – Yes, this may be an option, but will certainly need to meet more stringent criteria in terms of LTV, DSCR, rent roll scrutiny, NOI confidence (if not NNN) at a property level. If borrower has other (performing) assets that aren’t being factored into the equation (cross-collateralized), or other assets (cash, wealth mgmt. securities), some financial institutions are more open to getting creative on a property financing, IF they can grow a relationship with the borrower with additional lines of business (cash management., wealth, credit lines for business, etc.). Debt funds, family offices, credit unions, life companies and other sources are still wanting to put funds to work.

• Mezzanine Debt/Preferred Equity – In certain circumstances, it may be attractive to structure another layer of funding into the capital stack. The terms and conditions of these options can vary wildly, but may provide for some patient capital until an asset can be (re)stabilized.
• Bridge Loan – Sometimes these loans are pretty sketch, and only explored in the most challenged of assets, but the industry has grown to include a large number of potential lenders offering debt for transitioning properties. Often 1-3 year term, sometimes non-recourse, typically higher fees/rates, if the LTV’s are reasonable and the asset has decent fundamentals, this may be worth exploring if you need a ‘bridge’ towards a better situation in the future (lease up, rent growth, lower perm financing, etc.).
• Joint Venture – While most property owners on an existing asset may be reluctant to take on an additional equity partner, this may be a viable option if a declining asset value essentially forces an equity infusion (to ReFi at a lower valuation or LTV), and the owner doesn’t have, or isn’t willing to pony up some additional cash.
• Disposition – Although asset values are well off their highs of 2022, if there is material equity in an asset, but facing loan maturity, there is still quite a bit of dry powder looking to acquire quality assets. Obviously, valuations and cap rates are not going to be what they were, but, there still may be a healthy spread to be made on the owner’s basis. As property level fundamentals become more challenged, this option may become less desirable, but certainly worth a discussion to see if it might make sense and determine an opinion of value.

It’s quite possible that you may have more options than you realize. Our brokers have many valuable relationships with lenders in order to find you the right solution. If you have clients that need help, let’s talk, all relationships will be protected, and we can be a completely neutral party.

For more information, you can get in contact with our Sales & Capital Advisory Associate, Dan Wilson, Here.

First Capital Property Group, Inc. is a Full-Service Real Estate company leasing and managing over 2 million square feet of commercial property in Central Florida. The information contained herein is believed to be reliable; however, First Capital makes no representations or warranties, expressed or implied, regarding its accuracy. ©2023 First Capital Property Group, Inc. – Licensed Real Estate Brokers.