This article shows a sampling of some of the best office building hard money bridge loans that First Capital Trust Deeds (FCTD) has originated over the past few years. Our office building borrower clients, comprised of owner-users, developers and investors, came to us with extenuating circumstances like a mid-construction completion, property with high vacancy rates, and financial challenges (which happens to investors from time-to-time.) These funding situations ultimately called for hard money loans rather than bank or institutional lending.
Let’s take a look at some of the commercial hard money loans that FCTD has closed for investors.
FCTD secured $10.5 million for an investor group purchasing a 100% vacant office building in Southern California. The terms of the 24-month hard money bridge loan at 60% Loan-To-Value (LTV) had an 8.99% interest rate in the first year, and 9.99% in the second year.
A Southern California investor used a cash-out hard money loan to update their property and complete tenant improvements. The loan was written for two years, giving the investor significant time to manage the construction and also have one year of financials to qualify for long-term bank financing on what was expected to be a fully stabilized building.
An owner pulled equity from their three suburban medical office buildings in Florida, using a $14 million cross-collateral hard money bridge loan for down payment on a multi-family apartment building. Since there were multiple offers on the apartment building, the investor chose hard money to get the down payment funds quickly to protect their earnest money deposit, which had been released to the sellers.
A real estate developer, who had been self-funding the entire renovation of a 30,000+ office building, took out a $4 million first position hard money bridge loan to finance construction completion. The process from start to finish took about 35 days — which is longer than normal for most hard money loans, but standard for construction completion loans. Indemnifications and releases from subcontractors must be executed before this type of loan can be insured.
An Orange County real estate developer took out a hard money second mortgage, secured by the significant equity position in their office building. They then used the proceeds as equity for capital requirements to obtain construction and development loans. Some second mortgages are paid back within 2-3 months while others take a year. Repayment depends on the pace of the other project for which the cash-out second mortgage funds were used.
Conclusion
These best examples of office building hard money bridge loans are a sampling of the types of office property scenarios that FCTD’s borrower clients encounter. Hard money loan programs provide the flexibility and accommodations for real estate investors and developers to work through the challenges inherent to property investment, with both shorter and longer term financing options to tackle their next project.