Results

Complex Structured and Real Estate Finance Transaction

A developer was assembling a portfolio of multifamily residential properties to be financed with two loans: a $123,150,000 fixed-rate loan secured by 43 multifamily residential properties and a $7,450,000 floating-rate loan secured by five multifamily residential properties.  We represented the lender in connection with these transactions, which due to the developer's agreement with its seller, were required to close within a tight timeframe.  The larger loan was structured as a conduit loan, but contained numerous complications because of the nature of the assets including (1) the outright release of certain of the properties for condominium conversion, (2) the defeasance of pools of properties, (3) the sale of pools of properties subject to the conduit loan (which entailed the release of a proportionate amount of the existing loan and the "assumption" of a new loan in the amount released), and (4) staggered closing dates.  There was particular excitement at closing since the borrower was assembling this portfolio from three different sellers, and one of the sellers did not show up to initial closing.  The seller who was selling the bulk of the properties insisted that if we did not close on that day, he was going to terminate the contract and take the borrower's seven-figure earnest money deposit.   Our problem was that the loan documents contemplated the acquisition of 41 properties at closing, not 40.
 
We immediately devised a strategy to deal with this impediment, making arrangements with the title company to fund the transaction for the 40 properties and our client agreed to work things out with the borrower if the final property never closed.  Fortunately, we were able to close in time and the borrower acquired the 41st property the following day.

Result

 Achieving a successful closing within the necessary time frame was an excellent result for all parties.  The unique strategy we employed created a satisfactory arrangement, preventing the parties from losing a large transaction or being required to pay significant sums to revive the transaction.