Deal Overview

This recent refinance deal in Pleasanton, California, exemplifies Rubicon Mortgage Fund’s capacity to structure complex transactions that meet borrower needs while maintaining a prudent risk profile. The $11 million loan was secured for a 104,000-square-foot Class B office building at 50% occupancy. The borrowers, two brothers with substantial real estate holdings, approached us with a time-sensitive need: a $13 million loan due on the property.

Given the current instability in the office market, traditional lenders were hesitant to provide refinancing. This is where Rubicon Mortgage Fund’s flexibility and innovative approach came into play. We recognized the borrowers’ strength and the property’s potential, allowing us to craft a solution that addressed both the immediate refinancing need and the investment’s long-term viability.

The Borrowers: A Profile of Strength

At the heart of this deal are two brothers with a proven track record in real estate investment. Their portfolio demonstrates not only their expertise but also their financial strength. With substantial real estate holdings, these deep and strong borrowers bring a wealth of market knowledge and experience. Their high liquidity provides additional security to the loan, and their willingness to offer a personal guarantee underscores their commitment and confidence in the investment.

Rubicon’s Solution: A Multi-Faceted Approach

To meet the borrowers’ needs and mitigate risks, we structured a comprehensive financing package:

1. Primary Collateral: 104,000 SF Class B office building in Pleasanton, CA (currently 50% occupied); the lot is 7 acres of prime commercial property.

2. Additional Collateral: A 23,000 SF Multi-tenant industrial building in Burlingame was recently purchased for $11 million in cash. An additional $1 million in recent renovations and improvements were also put into the property.

3. Cash Contribution: Borrowers contributed an additional $2.4 million to the closing.

4. Personal Guarantee: The borrowers’ high net worth adds a layer of security and their personal belief in the deal.

5. Option for sale: The subject property in Pleasanton is currently optioned for redevelopment play for an amount well in excess to our loan.

The primary collateral is the 104,000-square-foot Class B office building in Pleasanton, CA. To strengthen the deal, we incorporated additional collateral in the form of a 23,000 SF multi-tenant industrial building valued at $11 million, with a further $1 million recently invested in renovations and improvements. This subject property, situated on 7 acres in a prime location, houses 27 tenants, providing a diverse and stable income stream.

Further enhancing the loan’s security, the borrowers contributed an additional $2.4 million in cash. The personal guarantee provided by the borrowers, backed by their high net worth, adds an extra layer of assurance to the transaction.

Critical Factors in Loan Approval

Several elements contributed to our confidence in this deal. The brothers’ extensive real estate experience and substantial holdings demonstrate their market understanding. Including the multi-tenant industrial building helps offset risks associated with the office property, while the prime locations of both properties enhance their long-term value proposition. Additionally, the office building is optioned with a local developer at a value significantly higher than our debt, indicating solid prospects.

Navigating Challenges, Delivering Solutions

This $11 million refinance deal exemplifies Rubicon Mortgage Fund’s ability to structure complex transactions that meet borrower needs while maintaining a prudent risk profile. In an era where traditional lenders are increasingly constrained, our flexible approach and deep understanding of the market allow us to step in and provide vital financing solutions.

For real estate investors facing similar challenges or seeking creative financing options, Rubicon Mortgage Fund stands ready to help. Our team of experts can craft tailored solutions that address your unique needs and market conditions.

Contact Rubicon Mortgage Fund today to explore how we can support your next real estate investment or refinancing project. Let us demonstrate how our innovative approach to lending can help you achieve your real estate investment goals, even in challenging market conditions.

The image featured above is the additional collateral industrial building in Burlingame, CA.