On behalf of Petrie Richardson Ventures (PRV), Calkain paired up with GEM Equity Markets to strategically place debt on the new 60,000 SF facility being developed. Calkain assessed several fixed income instruments, and with interest rates rising and the developer financial goals, CTL made the most sense and profit. PRV was able to pull out 140% of the construction costs up front while simultaneously locking a 3.875% interest rate at the time of the application.
PRV pulled out a $8,350,000 loan through a lender that was able to find a fixed income buyer. The fixed 20-year term coincides with the lease and is non-recourse. As a result, in a rising interest rate environment, PRV will not need to reset the loan upon completion of the construction.
Further, PRV is now set up to take advantage of a highly leveraged, zero cashflow loan. If they choose, PRV is able to seek out a buyer that needs a large amount of debt with very little equity, mostly done for tax purposes. Although a limited market, a zero cashflow deal will allow PRV to monetize even more cash out of the deal.
PRV is a long-time client of NetCMG.