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Acquisition of middle market Class A office complex in tech corridor
The Challenge
Sponsor was acquiring a 285,000 SF Class A office asset in Seattle's South Lake Union corridor with 82% in-place occupancy and a significant 2027 lease rollover. Most banks priced in downside cases that pushed coupons 75 to 125 bps above levels the deal could support.
The Structure
Five-year fixed-rate senior loan at 60% LTV from a life company with interest-only for the first three years. Dedicated TI/LC reserve sized to re-tenant the rollover. Cash management trigger set at 1.15x DSCR to protect the lender without starving the property.
The Outcome
Coupon came in 60 bps inside the best bank quote with no recourse. Interest-only period preserved cash flow during re-leasing. Sponsor closed on schedule.
Deal Mechanics
60 bps inside the best bank quote
Three years interest-only on a five-year term
Non-recourse with sized TI/LC reserve
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