At Menlo Commercial Capital, we strive to develop long-term relationships with every owner in our market areas.
We work with you to analyze your unique situation and strategize with you on how best to meet your investment objectives.
Whether that’s maximizing the returns during a hold period, acquiring the right real estate and at the right time, or effectively marketing your properties for maximum exposure, we ensure you’re taken care of.
That’s just what we mean by Guiding You Through...
Rick Padilla Principal
310.707.2182 Direct 714.908.3999 Fax
rick@menlocommercial.com
Lic #01217790
“Our
32 units; North Hollywood, California
“Our commitment is to provide superior capital market expertise and highly competitive loan products, which enhance the firm’s ability to serve its clients in their endeavor to create and preserve wealth.”
Advantage
Menlo Commercial Capital (MCC) is a leading source of real estate capital nationally. MCC brings together a highly experienced team of financing experts and relationships with prominent regional and national lenders. Our clients secure the most competitive financing for their acquisition, refinancing and development needs across all property types.
Market Research and Knowledge
Our research department provides an economic overview on major markets, market-specific data and deal-specific research. MCC’s national and local staff brings the advantage of a macro and micro approach to aggressive capital sources. MCC has the ability to pick the right lender.
Underwriting
Our experienced analyst specializes in package preparation, market research, and due diligence. Careful underwriting on the front end of a transaction ensures fewer re-trades at closing. Unlike most intermediaries or lenders, MCC takes a methodical approach to underwriting in the early stages of a deal. This approach translates into deliverability. MCC’s goal is to deliver 100% of the time.
Identifying Lending Sources
MCC identifies potential sources of debt and equity capital, which can include commercial banks, agency lenders, insurance companies, credit corporations, and private and public funds. By combining capital markets expertise and a high volume of loan product, MCC is able to source aggressive lenders on a local, regional and national basis.
Negotiating Application and Commitment
MCC is heavily involved with the negotiation of each transaction, particularly with the first application and commitment involving an individual lender. MCC constantly resolves challenging issues, allowing for the optimal outcome to any loan problem. MCC is highly dedicated and motivated to serve the needs of their clients.
Closing
As the loan enters the closing process, we organize the closing for our clients and serve as the liaison between the legal counsel, the borrower, and the lender’s underwriting or closing departments. We do everything possible to lay out all of the potential issues that may arise, so when it comes time to close the loan there are no surprise issues and the loan closes smoothly and on time. MCC’s goal is to close every transaction
Laurel Townhomes
20 Units; Brea, California
“With the highest level of ability to match borrowers and financial institutions, and an unsurpassed commitment to help his clients achieve their investment objectives, Rick has successfully closed over 600 loan transactions nationwide.”
Rick Padilla, Principal
310.707.2182 Direct
rick@menlocommercial.com Email
Rick Padilla has over 17 years of experience in the commercial real estate industry. In that time, he has demonstrated an unrivaled knowledge of the marketplace, the highest level of ability to match borrowers and financial institutions, and an unsurpassed commitment to help his clients achieve their investment objectives. He has successfully closed over 600 loan transactions nationwide.
In 2002, Rick expanded his real estate career and concentrated on multifamily & commercial loans. He joined a commercial real estate loan company providing loans, he earned the Top Producer title for six years in a row. He developed, maintained, and helped relationships flourish with over 18 lending institutions. Rick paved the way for the company to grow from 10 employees to a nationally recognized company, which now has 80+ employees and funded over $1 billion in loans.
In 2007, Rick founded Menlo Commercial Capital, he believes that the best way to create value is to work with the direct borrower and provide multiple financing options. He has effectively developed broker-friendly loan programs that provide borrowers with diverse products, superior service, and competitive rates and fees. As a result, he is consistently the top originator at Menlo with more than $100 million in annual loan production.
Rick is a graduate of Silicon Valley’s Business School, Menlo College. He holds a Bachelor’s degree in Finance with a minor in Economics. He is a member of the Mortgage Bankers Association. Personal Fact: Recipient of Iron Man Award from the Menlo College Football Team in 1993. Married to Xochitl with five kids: Gabriel 19, Larry 14, Camryn 13, Nolan 4, Troy 2.
Bobby Ramirez, Associate
310.707.2182 Direct bobby@menlocommercial.com Email
Bobby Ramirez has been a Loan Originator with The Menlo Group since 2004. He specializes in apartment loans and has closed over 150 transactions in the last 7 years. In 2007-2008 he was recognized as the Top Apartment Loan Originator with Menlo Commercial Capital where he closed more than $50 million in transactions.
Bobby joined Marcus & Millichap Capital Corporation in 2009 along with The Menlo Group. He works primarily with individual borrowers and family trusts. His expertise is in providing clients with insight into current market lending conditions, analyzing their current and historical property information, and finding the best financial program to fit their needs. An extremely high percentage of the individuals Bobby works with become repeat clients due to his diligence, honesty, and capacity to put the client’s needs first. His affiliation with the Menlo Group has allowed him to build relationships with a variety of lenders most of whom are leaders in the apartment lending industry nationwide. Bobby holds a Bachelor’s Degree in Business with a minor in Spanish from the Silicon Valley’s School of Business, Menlo College.
“His expertise is in providing clients with insight into current market lending conditions, analyzing their current and historical property information, and finding the best financial program to fit their needs.”
“Thank you Menlo Group for the impeccable job you did on my loan. I am very satisfied with the corporation and the guidance I received from all of you throughout the course of our refinance. This would not have been an easy process without you.”
Kannan Natarajan
“ “Rick and Bobby are talented and exceptional at what they do and their success proves it. I highly recommend The Menlo Group for anyone who needs financing for mobile home parks and apartments.
John Defalco, Mobile Modular
“Great job! The Menlo Group was there for me every step of the way. Their professionalism and performance were beyond impressive!”
Sandee Rough, Rowe Development Co.
“Thank you for sticking with this loan and going to bat for us during the process. Congratulations.”
Paul Allen, Allen Properties
“Sincere thanks. The Menlo Group helped me lock in at a rate that is really going to increase the cash flow of my portfolio and allow me to further improve my properties. I look forward to working with The Menlo Group soon.” Robert Fausner
“Good work on closing my HUD apartment loans. I appreciate the persistence the team put in to make it happen.” Bob Conte
“I put the utmost trust in Rick to take care of me on all of my apartment loans and they always deliver positive results. They have done an excellent job executing my deals. Our close working relationship makes me value them like family.”
Shu Baron
““I would like to thank the Menlo Group for the outstanding job refinancing my apartments located at 7460 Rogers Lane, Gilroy, CA. Calling Rick was one of the best decisions I’ve made just short of purchasing the apartments in the first place.”
“Although Rick doesn’t like my Cal bears, I still call him whenever I need financing. His team is effective and reliable. They did a great job on closing this group of loans.”
Blaine Warhurst, Warhurst Properties
“The Menlo Group got 2 loans for me in the past year on 2 apartment buildings. I am very happy with the results and I would definitely recommend them. They are very professional and knowledgeable. I will trust them to do my other loan as they come up.”
Janet Wright, JANA Properties Inc.
Gage Village Shopping Center
Bob Shoker
“Bobby delivered every thing he said he was going to. I will definitely call him for all of my future financing needs.”
“Rick and Robert take the time to fully understand the details of the specific loan request, their client’s goals, and our loan programs. They are honest and direct about the strengths and weaknesses of the deal. They consistently provide a complete loan file with all of the documentation we need to make a loan decision.”
Income Property Lending Officer, Commercial Bank
“103,656 sf; Los Angeles, California
FUNDED LOANS: MULTIFAMILY TRANSACTION HIGHLIGHTS
MISSION VILLAGE APARTMENT HOMES
Ontario, California
Multifamily – 134 units
$23,017,000 – Purchase & Refinance Loan
Challenges: The property was acquired with a floating rate loan. Upon stabilization, the borrower refinanced into a fixedrate loan. The property was located in a soft rental market with occupancy problems. The underwritten expenses were lower than historical expenses.
PARK REGENTS APARTMENTS
Mountain View, California
Multifamily – 76 units
$7,218,750 – Refinance Loan
Challenges: This was a cash-out refinance. The borrower wanted maximum loan proceeds on an adjustable loan with a low floor rate, short prepayment penalty and no balloon payment.
WESTGATE VILLAGE APARTMENTS
Anaheim, California
Multifamily – 84 units
$19,820,000 – Purchase & Refinance Loan
Challenges: This was the borrower’s largest multifamily asset. The purchase loan was structured with a mezzanine loan to attain a higher LTV. Upon stabilization the borrower refinanced into a fixed-rate loan.
FUNDED LOANS: MULTIFAMILY TRANSACTION HIGHLIGHTS
PARK VISTA ESTATES
Pomona, California
Mobile Home Park – 158 spaces
$8,400,000 – Refinance Loan
Challenges: This was a cash-out refinance with proceeds used to acquire another multifamily investment within the closing deadline. The underwritten expenses were lower than historical expenses.
RIDGEWOOD CASTLE APARTMENTS
Canton, Ohio
Multifamily – 284 units
$7,169,000 – Refinance Loan
Challenges: The borrower was losing a commercial property and had low liquidity. The borrower needed to cash-out in a declining market to save another property from foreclosure.
WESTGATE VILLAGE APARTMENTS
Los Gatos, California
Multifamily – 48 units
$6,500,000 – Refinance Loan
Challenges: This was the borrower’s only multifamily asset. Only one of the two 50% owners was willing to be on the loan.
BAY AVENUE APARTMENTS
Moreno Valley, California
Multifamily – 56 units
$6,350,000 – Refinance Loan
Challenges: The property was located in a soft market with occupancy problems, unemployment and a high foreclosure rate.
LYNWOOD APARTMENTS
San Bernardino, California
Multifamily – 124 units
$6,000,000 – Refinance Loan
Challenges: The property was located in a soft rental market with occupancy problems.
LAMPSON VILLAGE
Garden Grove, California
Multifamily – 56 units
$5,500,000 – Refinance Loan
Challenges: The borrower wanted the best rate available on a 15-year fully amortizing loan with no reserves or impounds.
FUNDED LOANS: MULTIFAMILY TRANSACTION HIGHLIGHTS
THE PAVILION APARTMENTS
Decatur, Georgia
Multifamily – 218 units
$5,400,000 – Purchase Loan
Challenges: The property was offering high concessions in a soft rental market outside of Atlanta. The borrowers were California syndicators looking for an interest-only loan.
SOUTH HAMPTON III APARTMENTS
Long Beach, California
Multifamily – 55 units
$4,800,000 – Purchase Loan
Challenges: The property had below market rents and we were able to underwrite using market income to achieve 75% LTV.
LEAVENWORTH APARTMENTS
San Francisco, California
Multifamily – 50 units
$4,800,000 – Refinance Loan
Challenges: The property was Student Housing for the San Francisco Art Institute. There was a 14% increase in income from the previous year while the property is located in a rent control area. The underwritten expenses were lower than historical expenses.
ROSECRANS APARTMENTS
Hawthorne, California
Multifamily – 60 units
$4,220,000 – Refinance Loan
Challenges: The borrower co-signed on 2 loans for his children and both had multiple delinquencies. This was the only multifamily property owned by the borrower.
WHITSETT APARTMENTS
North Hollywood, California
Multifamily – 63 units
$4,200,000 – Refinance Loan
Challenges: The property was being refinanced to buy out a partner who was not paying the loan payments. The property was being controlled by a receiver. There was deferred maintenance on the property.
VILLAGE NORTH APARTMENTS
Stockton, California
Multifamily – 118 units
$3,700,000 – Refinance Loan
Challenges: The borrower wanted cash-out in a declining market with unstable historicals.
FUNDED LOANS: MULTIFAMILY TRANSACTION HIGHLIGHTS
VALLEY VIEW VILLAGE
Sun City, California
Multifamily – 108 units
$3,500,000 – Refinance Loan
Challenges: The borrower wanted the best rate available on a 15-year fully amortizing loan with no reserves or impounds.
VALLE HACIENDA APARTMENTS
Van Nuys, California
Multifamily – 59 units
$3,214,000 – Refinance Loan
Challenges: The property had high expenses and minor deferred maintenance. It was 1 of 6 loans in a portfolio.
WYSTERIA APARTMENT HOMES
Redlands, California
Multifamily – 36 units
$2,004,000 – Refinance Loan
Challenges: This was a cash-out refinance in the Inland Empire at 70% LTV. The property had declining income and was offering rental concessions.
Arwyn Manor 59 Units; Los Angeles, California
GAGE VILLAGE SHOPPING CENTER
Los Angeles, California
Retail – Neighborhood Shopping Center
103,656 square feet
$16,858,500 – Purchase Loan
Challenges: The property is located in South Central Los Angeles. The anchor grocery store was non-investment grade and could not provide store financials.
KOHL’S DEPARTMENT STORE
Van Nuys, California
Multifamily – 59 units
$3,214,000 – Refinance Loan
Challenges: The property had high expenses and minor deferred maintenance. It was 1 of 6 loans in a portfolio.
ASHLEY FURNITURE HOME STORE
Bakersfield, California
STNL – Furniture Store
40,347 square feet
$7,200,000 – Purchase Loan
Challenges: The property was new construction with no store sales.
Menlo Commercial Capital has a track record of closing a wide variety of deals... across Southern California and throughout the United States.
PRESTONWOOD PARK – LA FITNESS
Carrollton, TX
STNL – Fitness Center
45,000 square feet
$6,400,000 – Purchase Loan
Challenges- The property was new construction with no store sales.
SUPERIOR GROCERS
Los Angeles, California
Retail – Neighborhood Shopping Center
44,874 square feet
$6,000,000 – Refinance Loan
Challenges: The property was a new mixed-use development with 85 multifamily units above the retail center. The grocery store was not investment grade and had only limited sales figures. Three tenants were not open at the time of funding.
STORAGE OUTLET
El Monte, California
Commercial – Self Storage
1,245 storage units
$5,917,500 – Refinance Loan
Challenges: The property consisted of metal containers that were bolted to the ground.
HANCOCK OFFICE BUILDING
Aliso Viejo, California
Office
29,924 square feet
$5,270,000 – Purchase Loan
Challenges: The property had a low cap rate with high market rents.
CORPORATE TERRACE MEDICAL OFFICE
Corona, California
STNL – Medical Office/Surgery Center
10,400 square feet
$4,345,000 – Purchase Loan
Challenges: The property was an additional owner-user office location for a group of doctors. The loan included tenant improvements fund of $1,400,000. The loan amount exceeded the purchase price.
DC MOTORS
Corona, California
STNL – Industrial
55,459 square feet
$3,400,000 - Refinance Loan
Challenges: The tenant was a start-up company.
Menlo Commercial Capital has a track record of closing a wide variety of deals... across Southern California and throughout the United States.
DOLLY VARDEN HOTEL & LA PASADA HOTEL
Long Beach, California
Commercial – SRO Hotel
66 units
$2,750,000 – Purchase Loan
Challenges: The property had deferred maintenance and unstable historical data.
CASTLE ROCK VILLAGE SHOPPING CENTER
Castle Rock, Colorado
Retail Center
41,898 square feet
$2,600,000 – Refinance Loan
Challenges: There was a lease rollover concern with the largest lease expiring within 4 years.
POTTERS VILLAGE
Oxnard, California
Retail – Strip Center
13,048 square feet
$1,709,750 – Purchase Loan
Challenges: The seller was guaranteeing rent in a portion of the vacant space. A portion of the tenants did not have leases or rental agreements in place. 47% of the tenants had leases expiring within 3 years. We were able to achieve 70% LTV
WALGREENS
Aliso Viejo, California
STNL – Pharmacy
13,386 square feet
$5,727,000 – Purchase Loan
TUTOR TIME CHILD CARE LEARNING CENTER
Laguna Niguel, California
STNL – Child Development Center
12,317 square feet
$3,500,000 – Purchase Loan
SPROUTS
Glendale, Arizona
STNL – Grocery Store
30,600 square feet
$3,000,000 – Purchase Loan
US DEPARTMENT OF AGRICULTURE
Victorville, California
STNL – Office
8,684 square feet
$1,900,000 – Refinance Loan
MIDAS
Harbor City, California
Commercial – Auto Repair
14,376 square feet
$1,830,000 – Purchase Loan
LA PETITE ACADEMY
Powell, Ohio
STNL – Child Development Center
10,000 square feet
$1,648,000 – Purchase L
JACK IN THE BOX
Baton Rouge, Louisiana
STNL – Restaurant
2,855 square feet
$1,180,000 – Purchase Loan
ADVANCE AUTO PARTS
Hagerstown, Maryland
STNL – Auto Parts
7,260 square feet
$1,178,000 – Purchase Loan
Menlo Commercial Capital has a track record of closing a wide variety of deals... across Southern California and throughout the United States.
CVS PHARMACY
Chattanooga, Tennessee
STNL – Pharmacy
10,906 square feet
$1,036,112 – Purchase Loan
O’REILLY AUTO PARTS
Albuquerque, New Mexico
STNL – Auto Parts
6,783 square feet
$900,000 – Refinance Loan
HARDEE’S
Champaign, Illinois
STNL – Restaurant
4,778 square feet
$840,000 – Refinance Loan
JACK IN THE BOX
Pocatello, Idaho
STNL – Restaurant
2,400 square feet
$651,750 – Refinance Loan
FUNDED LOANS: PORTFOLIO HIGHLIGHTS
LOS ANGELES & ORANGE COUNTY APARTMENTS
Los Angeles & Orange County, CA
Multifamily - 608 units
$47,947,000 - Refinance Loans
INLAND EMPIRE APARTMENTS
San Bernardino, CA
Multifamily – 550 units
$36,817,000 Refinance & Purchase Loans
APARTMENTS & OFFICES
Los Angeles, California & Las Vegas, Nevada
Multifamily – 635 units
Office – 32,260 square feet
$34,600,000 - Refinance & Purchase Loans
ORANGE COUNTY & LANCASTER APARTMENTS
Orange County & Lancaster, California
Multifamily & Student Housing - 404 units
$19,860,000 - Refinance Loans
7 WALGREENS
Wisconsin
STNL – Pharmacy
$18,811,310 – Purchase Loans
EAST BAY APARTMENTS
Hayward & San Leandro, California
Multifamily – 215 units
$14,475,000 – Refinance Loans
FUNDED LOANS: PORTFOLIO HIGHLIGHTS
LAKE MERRITT APARTMENTS
Oakland, California
Multifamily - 154 units
$13,775,000 - Refinance Loans
LOS ANGELES LOW INCOME HOUSING
Los Angeles & Panorama City, California
Multifamily – 251 units
$9,631,000 - Refinance & Purchase Loans
KOREATOWN BRICK APARTMENTS
Los Angeles, California
Multifamily - 199 units
$8,200,000 - Purchase Loans
UC SANTA BARBARA STUDENT HOUSING
Goleta, California
Multifamily - Student Housing - 152 units
$7,055,000 - Refinance Loans
LOS ANGELES AFFORDABLE HOUSING
Los Angeles, California
Multifamily (Restricted Contract) - 84 units
$6,414,000 - Refinance Loans
WASHINGTON STUDENT HOUSING BELLINGHAM, WASHINGTON
Multifamily - Student Housing - 308 units
$6,095,500 - Refinance Loans
“The Menlo Group has financed a good portion of my real estate portfolio and I trust them to perform. They always ensure I am getting the most aggressive loan terms available in the market for each of my loans.”
- Alex Meruelo, Meruelo Group
MULTIFAMILY REFINANCE PORTFOLIO
608 units – 15 properties
Bellflower, Compton, Los Angeles, Lynwood, Pomona, Santa Ana, & South Gate
Loan Amount: $47,947,000
Borrower: Merona Enterprises Inc
Property Type: Multifamily
Units: 608
Rentable SF: 15 Properties
Year Built: 1960-2008
Purpose of Financing: Refinance
Financing Source: Fannie Mae and Savings &Loan Banks
Appraised Value: $84,200,000
Loan to Value: 57%
DSCR: 1.20-1.55
Challenge
The borrower required interest-only financing to maximize his cash flow. A portion of the loans needed to have interim financing to keep the option open to sell without a prepayment penalty and another portion needed to have permanent financing. Twelve of the fifteen properties had prepayment penalties that we needed to schedule closing dates after they expired; three of the twelve properties had a prepayment penalty which expired months after the other nine properties in the portfolio. The portfolio as a whole had a high expense percentage and is managed by the owner’s management company with high management expenses. Loan amounts ranged from $1,000,000 to $7,200,000, which limited our lending resources since the small loans were too small for some larger lenders and vice versa.
Process and Strategy
We presented the portfolio to various agencies and lending institutions to ensure the best pricing. We extrapolated various expenses from the P&L
statements and determined accurate expense numbers for each property to use significantly lower expenses than historically shown on the P&L statements. We strategically placed each property with a specific lender based on the borrower’s goals for that individual property.
Outcome/Value Added
We were able to rate lock all deals at one time including the loans that could not close for months. We financed a 5-year interestonly loan in Tier IV, which is the best pricing while competing banks were underwriting to Tier III loans. The difference between the two tiers was 22bps, which saved the borrower $385,690 in the first 5 years. A portion of the portfolio was placed with a savings and loan bank with no prepayment penalty to accommodate a future sale and consequently reduced the borrower’s payment by $104,000 annually. The borrower was also able to refinance his residential portfolio while lowering his annual payment by $464,340 per year.
Challenge
The borrowers wanted a cash-out refinance to cover their prepayment penalty and have capital for future investments. The borrowers were already working with a competing lender to start the refinance process. The lender they started with had the existing loan on the three properties and were quoting Tier II loans, which is a higher interest rate. Four of the seven partners, including the strongest and highest percentage owner, did not want to be underwritten or sign for the loan. A major concern was that the appraised value would not be as high as necessary.
The portfolio had a high expense percentage and declining income. The Lancaster property was located in a declining market with occupancy, foreclosure, jobloss, and concession problems; it had 25-30 vacancies during the loan process. The Anaheim properties were experiencing declining occupancy and income; one of the properties was adjacent to a school, which created a high concentration of students with leases less than 12-month leases. The properties had yield maintenance prepayment penalties, which totaled over $1,100,000.
Process and Strategy
We attained a waiver so the 33% majority owner did not have to sign loan documents and we were able to get the lender comfortable with underwriting only three partners, who made up only 34% ownership of the largest building. We provided the appraiser with rental and sales comps, including Menlo exclusive sales that were not publically listed. We extrapolated various expenses from the P&L statements to use significantly lower expenses than historically shown. We streamlined the processing, underwriting legal, and combined 3rdparty reports to lower overall costs.
Outcome/Value Added
We financed the loans in Tier III while the borrower’s initial bank quoted Tier II loans. The difference between the two tiers was 19bps, which saved the borrower $289,809 over the term of the loan. The appraised values came within $275,000 of the values we were targeting. Final loan amounts were within 1% of the loans on the initial application. We were able to provide new loans which allowed the borrower to cash out $8,237,000.
“Rick & Team did a great job dealing with our elaborate ownership structure. They worked with the underwriters at Fannie Mae to find a way to get them comfortable and close the loans.”
- Sandee Rough
Rowe Development Company
MULTIFAMILY REFINANCE PORTFOLIO
404 units - 3 properties
Lancaster & Anaheim, CA
Loan Amount: $19,860,000
Borrower: Racquet Club LLC
Property Type: Multifamily & Student Housing
Units: 404
Rentable SF: 3 Properties
Year Built: 1968-1973
Purpose of Financing: Cash-Out Refinance
Financing Source: Fannie Mae
Appraised Value: $33,400,000
“Refinancing my 84 units in Anaheim was not easy for many reasons but your team was able to find a lender for us in these difficult times. Westgate Village is an extremely difficult project because there are lots of hidden problems with it. I’m glad your team was able to meet my persistence.”-
- Tina Tran, NNT Properties LLC
WESTGATE VILLAGE APARTMENTS
Multifamily - 84 units
141 N. Richmont Dr. Anaheim, CA
Loan Amount: $19,820,000
Borrower: NNT Properties LLC
Property Type: Multifamily
Units: 84
Rentable SF: 70,797
Year Built: 1980
Purpose of Financing: Purchase & Refinance
Financing Source: Bank & Fannie Mae
Appraised Value: $27,250,000
Loan to Value: 73%
DSCR: 1.25
Challenge
We provided an acquisition loan with a mezzanine loan to maximize loan proceeds. Upon stabilization, we refinanced the existing debt into a fixed-rate loan. The property is adjacent to a landfill (owned by the borrower) undergoing methane gas and water testing to satisfy EPA and water board requirements. The property had deferred maintenance in the common areas and a majority of the property was leased to Section 8 tenants with rents above market. It had a high expense percentage and owner’s expenses were comingled with the subject property. The borrower’s net worth, liquidity, and multifamily experience did not meet Fannie Mae’s guidelines. The loan was turned down by several other Fannie Mae/Freddie Mac lenders, banks and the existing lender.
Process and Strategy
We were able to provide Fannie Mae with comps to support a higher value than anticipated by the borrower. We funded proceeds to cure the deferred maintenance and pay property taxes. We presented the units’ renovation plans that were in place to support higher rents and lower liquidity. We extrapolated capital expenses and one-time expenses associated with environmental clean-up and renovation to
use significantly lower expenses than historically shown. We received waivers for liquidity, net worth, lower baseline expenses, ownership by multiple asset entity, and former landfill as part of collateral. To achieve the waivers, we put a large focus on improving NOI of the subject property and the new shopping center development being built next door anchored by Lowes and Albertsons.
Outcome/Value Added
The value came in higher than most of the comps based primarily on one sale. The value was less than 1.5% below the purchase price from 2006 while the remainder of the market dropped 16%. The borrower was able to lock in a fixed rate with a loan that paid off all 5 previous loans, loan fees, immediate repairs, and required escrows and reserves. The new loan was principal and interest while the borrower was paying interest-only on 4 of the previous loans. The new payment dropped by $21,519 annually from the existing payment with a floating interest rate. With lower fixed payment and interest rate, the borrower will pay down $1,580,000 over the term of the loan. The improved cash flow will allow them to develop a self storage facility next to the property in the near future.
Challenge
The borrower required a large cash-out of his existing retail center in California to purchase a new center in Colorado. Both retail centers were underwritten in a market where more emphasis is placed on entire portfolio’s performance. The refinance was timesensitive due to a contractual purchase deadline. There were environmental risks at both retail centers due to dry cleaners operating in the past. The Santa Ana property had a tenant lease expiring in 3 years, which made up 20% of the center, and 63% of the tenants were on month to month rental agreements. The Denver property had 2 tenants (12% of the center) that were paying rent but not occupying the space. The Denver property had a tenant (16% of the center) occupied by the state of Colorado with an out clause at any time. The Denver property had deferred maintenance throughout the center.
Process and Strategy
With the challenge of the environment risks, our lending sourceswere limited at a time when most lenders were not comfortable. We provided full details of leases and precise P&L historicals toshow historical tenancy and eliminate the lender’s apprehension. We showed that the tenants were long-term tenants and would stay in the center without a long-term lease. We relied heavily on the borrower’s strength and experience to get the lender comfortable with the deferred maintenance without a holdback for repairs.
Outcome/Value Added
We were able to get the borrower $2,885,000 cashout on the refinance to use as a down payment on the purchase. We closed the refinance shortly followed by the purchase loan and met all contractual deadlines. We only needed a Phase I on the retail center in Santa Ana because it was close to a gas station and it came back clean. We were able to get each lender to becomecontent with the tenants and income and financed the full loan amount.
“I was using my existing bank to pull money out to buy a center in Colorado using Chase. Both banks backed out on the loans because of concerns with the property. I contacted Rick and his team and they were able to close both loans for me with better terms.”
- Alan Brown,
Investors Property Services
BRISTOL RETAIL PLAZA
Shopping Center – 27,762 square feet
1212 S. Bristol St.
Santa Ana, CA
ATHMAR PARK SHOPPING CENTER
Shopping Center – 58,418 square feet
1901 W. Mississippi Ave Denver, CO
Loan Amount: $7,585,000
Borrower: Mountain Laundry Corp LLC
Property Type: Retail
Rentable SF: 86,160
Year Built: 1960 & 1961
Purpose of Financing: Cash-out Refinance & Purchase
Financing Source: Two Commercial Banks
Appraised Value: $12,225,000
Loan to Value: 62%
DSCR: 1.25
“I
came to Rick Padilla after working with a few brokers and banks that could not close my loan. I was told my loan could not be done and Fannie Mae would never be able to do the loan. The Menlo Group was able to close the loan very quickly with their Fannie Mae relationship.”
- Ken Ippolito, King Closer LLC
RIDGEWOOD CASTLE APARTMENTS
Multifamily - 286 units
125 17th St. NW & 1459 Rachel Woods St. NW Canton, Ohio
Loan Amount: $7,169,000
Borrower: Ken Ippolito
Property Type: Multifamily Units: 286
Rentable SF: 193,110
Year Built: 1972-1974
Purpose of Financing: Cash-Out Refinance
Financing Source: Fannie Mae
Appraised Value: $11,030,000
Loan to Value: 65%
DSCR: 1.35
Challenge
Canton, Ohio was deemed as a pre-review market by Fannie Mae due to the overall decline in the area. The borrower could not find a local lender to do the loan and had been denied by three other Fannie Mae lenders and two commercial banks. The borrower needed to refinance with cash-out to pay down a loan on a vacant, nonperforming commercial building. The building adversely affected his debt ratio (high), cash flow (negative), and liquidity (low). The closing of the loan was extremely timesensitive to prevent the commercial loan from going into default. There were no sales comps in the area for more than 18 months.
Process and Strategy
The commercial loan was paid off in escrow to ensure the cashout was being used for the intended purpose. We diligently worked with the lender and the underwriter to show potential cash flow after the pay-off. We focused on the strength of the subject properties and the borrower’s multifamily experience. We used comps 200 miles from the subject property to support a higher value.
Outcome/Value Added
We financed the same loan amount as the original loan application. The new appraisal came at a high value, only $70,000 less than the value in mid-2008 before the market dropped significantly. We were able to provide a new loan, which allowed the borrower to cash out $1,676,357.
Challenge
The borrower sought the most competitive 10-year fixed loan and had a 45-day window to take advantage of a 1% reduction on the existing prepayment penalty. The borrower ventured to get direct financing from a commercial bank and a Fannie Mae lender while seeking our services, which ultimately put us in direct competition with our lending resources. The subject property had tuckunder parking under more than 40% of the building’s perimeter and is located 2.2 miles from the Hayward Fault Line, which is a concern to most lenders. The subject property had a high expense percentage.
Process and Strategy
We were able to obtain superior pricing compared to competing lenders. Fannie Mae requires a Probable Maximum Loss Report because of the tuck-under parking and age of the building. We obtained a seismic PML report to demonstrate that the building is adequately supported in case of an earthquake regardless of having tuck-under parking. We worked with the borrower and the lender to extrapolate capital improvements, one-time, shared, and personal expenses to use significantly lower expenses than historically shown on the P&L statements.
“My existing bank contacted me offering a reduced payoff on my existing loan if I could refinance with a new lender in 45 days. Rick demonstrated how he and his team were different than the other banks and brokers I spoke with by explaining the strategy they would use to achieve my goals. We closed in 39 days and they delivered what they had promised.”
Janet Wright, Jana Properties, L.P
Outcome/Value Added
We were able to get the borrower into a tier with better pricing than the original application, which lowered the rate 20bps with a savings of $47,606 over the term of the loan. We met the 45-day window allowing the prepayment penalty reduction to eliminate over $30,000 in prepayment penalties. Working with a leading engineer to ensure all reports came within Fannie Mae guidelines helped us get pass one of our biggest challenges with the fault line.
FOOTHILL MANOR APARTMENTS
Multifamily – 40 units
245 La Pala Dr. San Jose, CA
Loan Amount: $3,100,000
Borrower: Jana Properties LP
Property Type: Multifamily Units: 40
Rentable SF: 39,432
Year Built: 1965
Purpose of Financing: Refinance
Financing Source: Fannie Mae
Appraised Value: $5,300,000
Loan to Value: 58%
DSCR: 1.35
AVAILABLE LOAN PRODUCTS
AGENCY FINANCING
Fannie Mae & Freddie Mac
Property Types: Multifamily, Senior Housing, Student Housing and Affordable Housing
Fixed Rate & ARM Products
5, 7, 10, 15 & 30-year fixed terms
30-year amortization
5-30 year term
80% Max LTV
CONVENTIONAL APARTMENT FINANCING
Saving & Loan Banks And Credit Unions
Property Types: Multifamily
Fixed & Adjustable Rate
3, 5, 7, 10 & 15-year fixed terms
30-year amortization
30-year term
75% Max LTV
SAMPLE PROPERTIES
CMBS & LIFE INSURANCE FINANCING
Conduit Lenders & Insurance Companies
Property Types: Retail, Office, Industrial,
Self-Storage & Multifamily
Fixed Rate
5, 7 & 10-year fixed terms
30-year amortization max
5-10 year term
75% Max LTV
FHA FINANCING
U.S. Dept. of Housing And Urban Development
Property Types: Multifamily, Senior Housing, and Healthcare
35-year Fixed Rate
35-year amortization
Fully Amortizing Loan
85% Max LTV
SAMPLE PROPERTIES
AVAILABLE LOAN PRODUCTS
INVESTMENT GRADE SINGLE TENANT FINANCING
Property Types: Retail, Office, Industrial
Fixed Rate
30-year amortization max
Fully Amortizing Loan
95% Max LTV
RETAIL NET LEASE FINANCING
Property Types: Retail
Fixed Rate
5, 7 & 10-year fixed terms
30-year amortization max
10-25 year term
70% Max LTV
BAY AREA
LOS ANGELES & ORANGE COUNTY
Menlo Commercial Capital has a track record of closing a wide variety of deals... Across Southern California and throughout the United States.
This map contains information from sources we believe to be reliable, but we make no representation, warranty, or guaranty of its accuracy. This map is published for the use of Menlo Commercial Capital and its clients only. Redistribution in whole or in part to any third party without the prior written consent of Menlo Commercial Capital is strongly prohibited.
MENLO COMMERCIAL CAPITAL CLOSINGS
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$11,367,000Multifamily - 134u W. B St. & N. Palmet to Ave. Ontario, CA
$10,450,000Multifamily - 84u Westgate Village Anaheim, CA
$9,370,000Multifamily - 84u Westgate Village Anaheim, CA
$7,800,000MHP - 158u Park Vista estates Pomona, CA
$7,218,750Multifamily - 76u Park Regent Apar tments Mountain View, CA
$7,200,000STNL - 40,347sf Ashley Furniture Bakersfield, CA
$7,200,000Luxury SFR - 11,316sfRim Ridge Newport Coast, CA
