First Trust Deed collateralized by a 73,000 square foot shopping center in Port Orchard, WA (about 18 miles west of Seattle, WA via a ferry). Built in 1968, this retail center needs a face lift in order to bring the occupancy over its current levels of 25%. The borrower already has signed agreements with two tenants to lease 30,000 square feet which will increase the occupancy to 68%. The borrower is also in talks with two other tenants that would bring the center to an occupancy over 90%. Current tenants include Papa John’s Pizza, South Park Pharmacy, Long John’s Barber, 5 Star Laundry, and South Park Cleaners. The net operating income (NOI) should increase from its current level of $193,000 to over $682,000. This is of the utmost importance since the NOI is the basis of what most commercial building sale for. Given this new NOI and a local market capitalization rate for this product type of 8%, the property should be worth over $9,000,000 when it is completed. In addition to the retail center, the borrower is also acquiring a 1.6-acre pad that he plans to sell to a multifamily developer which will also increase the value of the overall collateral.
Loan Amount: $5,400,000
Yield: 11% Interest is paid monthly in arrears with payments due on the 1st of each month with a 10 day grace period.
Term: Nine months with an optional nine-month extension period at maturity.