Bridge Loan, Kansas City, MO

Business
An experienced owner/operator of commercial real estate (“Borrower”) purchased a defaulted Note on a 104 unit multifamily property in Kansas City, MO (MSA) from Citibank.

Situation
The prior operator of the defaulted Note failed to maintain the property to standard city regulatory
conditions. At the time of the loan, the property was 67% occupied with Net Operating Income creating a DSCR of over 2.0. After the Note was purchased, a quit claim deed was filed with full title transferring to the new owner. The company that acquired the Note effectively financed the previous Note purchase and completed the remaining repairs. The completion of the improvements would allow the Note purchaser to bring the occupancy to 85% in order to gain permanent financing or the exit strategy to the bridge loan. Due to the city-required repairs and occupancy level of 67%, conventional financing was unavailable.

Objective
Provide the Borrower a one year bridge loan at 48% loan-to-cost in order to complete the repairs and execute the lease-up strategy. Within one year, take out the bridge loan with a lower cost, longer term conventional financing solution.

Strategy
Upon completion of the building improvements and remaining lease-up, permanent financing was obtained through a regional bank. The short-term bridge loan allowed the Borrower to utilize leverage to increase its internal rate of return and maintain liquidity. Long-term financing was obtained without indefinitely granting away equity ownership.

Result
Prescient Capital valued the building and provided a bridge loan of 48% Loan-To-Cost (LTC ) of the Note Purchase within 25 days. The loan was personally guaranteed by the Borrower.

Bridge Loan, Kenosha, WI

Business
An experienced commercial real estate group (“Borrower”) was purchasing assets from a distressed bank.

Situation
The Borrower was under contract to purchase two retail/mixed-use properties and was required to close within 45 days. The Borrower had the capital to acquire the assets with cash; however, the bridge loan allowed the Borrower to maintain its equity ownership percent and return thresholds.

Objective
Provide the Borrower a one year bridge loan at 80% loan-to-cost and a 1.30 debt service coverage ratio. Within one year, take out the bridge loan with a lower cost, longer term conventional financing solution. The subject property will be 100% occupied with credit tenants. Close quickly on the acquisition and take advantage of the discount being offered by the bank.

Strategy
The short-term bridge loan allowed the Borrower to quickly acquire the properties, utilize leverage to increase its internal rate of return and maintain liquidity. Long-term financing was obtained without indefinitely granting away equity ownership. Capitalize on the opportunity arising from the Bank.

Result
Prescient Capital provided a bridge loan for a one year term after conducting due diligence on the
properties and guarantor. The loan was closed within 32 days of receipt of the term sheet and valued at approximately 48% loan-to-value.

Bridge Loan, Chicago, IL

Business
A commercial real estate group (“Borrower”) with a successful 35 year track record needed an immediate loan to resolve a tax liability.

Situation
Borrower had an immediate tax liability they needed to resolve and needed a bridge loan to resolve the issue until they received $12 million in sale proceeds; selling 1,000+ apartment units that were under contract to close within 90 days.

Objective
Provide the Borrower a one year bridge loan with the option to repay without prepayment penalty.
Prescient Capital secured the loan with a 100% pledge of the membership interest in a single purpose limited liability company controlling an apartment complex with over 500 apartment units. The loan was less than 17% of the value of the collateral (17% LT V). The Borrower plans to repay the loan with the sale of an existing multifamily portfolio under contract.

Strategy
The short-term bridge loan allowed the Borrower to quickly satisfy the existing tax liability and also
appease existing banking relationships.

Result
Prescient Capital provided a bridge loan of $1.6M for a one year term after conducting due diligence on the properties and guarantor. Prescient Capital secured an over collateralized loan; collateral loan-to-value under 17%. In addition, the Borrower’s net worth exceeds $150 million thereby providing a strong guarantee to the Prescient Capital loan. The loan is closed within 10 business days after term sheet.

Discounted Note Purchases (DPOs), Cedarburg, WI

Business
A commercial real estate group (“Borrower”) with a successful 40+ year track record needed an immediate loan to close prior to year end in order to receive the bank discounted Note offer.

Situation
The Borrower was under significant pressure from the existing lender for several reasons, a) the
Borrower/Lender relationship was strained due to vacancy prior to signed tenants, and b) the Bank was under significant pressure from the regulators on the overall condition of the bank’s loan portfolio.

Objective
Provide the Borrower a one year bridge loan, with the option to repay without prepayment penalty.
Within one year, take out the bridge loan with a lower cost, longer term conventional financing solution. The loan was less than 65% of the value of the collateral. The Borrower plans to repay the majority of the loan with the immediate sale of several assets.

Strategy
The short-term bridge loan will allow the Borrower the ability to immediately act on the Bank discounted Note offer and utilize leverage to increase its internal rate of return and maintain liquidity. Capitalize on the opportunity arising from the Bank.

Result
Prescient Capital provides a bridge loan of $2.78M for a one year term after conducting due diligence on the properties and guarantor. Prescient Capital secures an over collateralized loan; collateral loan-to-value under 65%. In addition, the Borrower’s net worth exceeds $13 million thereby providing a strong guarantee to the Prescient Capital loan. The loan is closed within 30 business days after term sheet.

Discounted Note Purchases (DPOs), Petoskey, MI

Business
A commercial developer (“Borrower”) had completed a mixed use multifamily and retail project.
The multifamily component consists of 12 buildings that contain a total of 240 rental units. Eight of the 12 buildings were 100% complete and fully leased with the remaining 4 buildings 95% complete. The retail component included a total of 45,980 SF which was approximately 72% leased at $15–23 NN.

The commercial developer had interested parties for the sale of virtually all of the excess developable retail space. Current cash flow was approximately $1.15 mm. This represented the income from the stabilized portion of the multi-family component (160 of the 240 units) and the leased portion of the retail component. The borrower expected to complete and stabilize the last 4 multifamily buildings (80 units) by the Summer of 2010.

The stabilized cash flow was projected at $2.16mm representing a combined 90% occupancy of the
apartment units and retail center.

Situation
The Bank that originated the loan was closed November 2009; its assets were acquired by another Bank with FDIC assistance. The acquiring bank was selling this particular loan.

Objective
The bank had offered the existing Borrower a discount on the existing debt if they found an alternative lender. The bank’s objective was to achieve the discounted payoff in 30–60 days. The transaction was an asset liability management strategy that provided additional equity to avoid potential regulatory scrutiny.

Strategy
Existing Borrower had been introduced to Prescient Capital to purchase the note directly or participate with the buyer in the note purchase.

Result
Prescient Capital’s funding constituency facilitated a discounted payoff on three non performing mortgage notes with a combined outstanding principal balance of approximately $49 million for $13.4 million (a 72.6% discount). The loan was secured by 240 apartments, a 45,980 square foot Lowe’s-anchored retail center, and 3 improved building parcels located in the center of a two million square foot regional shopping center and tourist destination. Borrower has initiated an application for HUD financing to provide new permanent debt for the apartment project. Borrower has an offer to purchase half of the retail project for $9.6M upon stabilization and is also capable of using regional banks to finance the retail portion once it is stabilized. The proceeds from the refinancing will be used to extinguish the $13.9M loan. The Borrower is also in the process of selling or leasing the improved retail pads which can be used to pay down the short-term financing.

Discounted Note Purchases (DPOs), Washington D.C.

Business
A commercial real estate group (“Borrower”) with a successful track record needed an immediate loan to close prior to year end in order to receive the bank discounted Note offer. The existing loan was on four apartment buildings in Washington D.C. totaling 99 units. The occupancy of the property was 96% with a conservative Net Operating Income (NOI) estimate of $636,000.

Situation
The Borrower was under significant pressure from the existing lender for several reasons, a) the Borrower/ Lender relationship was strained due to the expired term on the loan, and b) the Bank was under significant pressure from the regulators on the overall condition of the bank’s loan portfolio.

Objective
The bank had offered the existing Borrower a discount on the existing debt if they found an alternative lender. The bank’s objective was to achieve the discounted payoff in 30–60 days. The transaction was an asset liability management strategy that provided additional equity to avoid potential regulatory scrutiny.

Strategy
Existing Borrower had been introduced to Prescient Capital to purchase the note directly or participate with the buyer in the note purchase.

Result
Prescient Capital’s funding constituency facilitated a discounted payoff on the mortgage notes. The loan was secured by four apartment buildings in Washington D.C. totaling 99 units. Borrower has initiated an application for permanent financing to provide new permanent debt for the apartment project. The proceeds from the refinancing will be used to pay off the bridge loan.