National Starch & Chemical Logo

Client had a right of first refusal to build a new 600,000 square foot distribution facility for a BBB-rated credit, National Starch & Chemical; however, the client had limited development experience and limited capital to invest toward an anticipated $17 million cost to build.

Services

A professional team was formed to assist the client including a seasoned real estate attorney and a general contractor who bid and was selected from among the top tier companies in the market; it was determined quickly that the building would have to be pre-sold, based on the 15-year primary lease obligation of the credit tenant; this strategy would help establish value and an exit strategy upon building completion and occupancy.

Results

Two banks were involved as participants in the construction loan, which included a structured mezzanine component; the total debt structure exceeded 75% of the property’s market value established by the price agreed to by the investor who committed to acquiring the property upon completion; the distribution facility was completed on time and slightly over budget and the sale was completed upon the tenant accepting occupancy; construction and mezz loans were repaid; the borrower earned several million dollars without having to invest anything on the front end.

Note: We have several professionals with substantial client transactional experience prior to joining RESOURCE Commercial, which is included above.