Inland Mortgage Capital (IMC) recently originated a $6,500,000 first mortgage loan on a 30-unit apartment complex near the Los Angeles CBD. IMC’s loan refinanced the existing debt, provided minor completion dollars, and will allow time for the Borrower to properly lease up the Property as it was vacant at loan closing. The previous debt was nearing maturity default and was at a much higher interest rate. The Borrower was interested in IMC’s financing to not only lower the interest rate, but to also have the flexibility of no prepayment premium. Once the lease up is complete, the Borrower should be in position to refinance in short order, regardless of the term of the loan.
IMC was impressed with the Borrower’s perseverance in overcoming legal and construction challenges associated with the project. Having had many similar types of properties in the immediate area, it insisted on top quality building finishes for this project. Further, the proximity to Downtown Los Angeles and a local hospital should make it an attractive rental residence for potential tenants.
IMC provided a holdback for the remaining costs to complete the project, as well as an interest reserve to get through the lease-up process. With no prepayment premium to worry about, the Borrower should be on the fast track to a successful and cost-effective exit strategy.
