© 2024 Real Estate Consultants of Colorado, LLC
Austin, TX
.jpg)
When REC started working with an established bouldering gym to find a new location, they had already received signed term sheets from two lenders, one of which would provide an SBA loan for the interior buildout and another from an equipment finance company to provide a loan for the $750,000 bouldering wall itself. Climbing and bouldering walls are more unusual subjects of equipment loans because (a) they have no serial number and (b) there is a relatively limited market for the lender to sell it upon the borrower's possible default.
We proceeded with our search and negotiated a ten-year lease for the former Lucky's Market at 38th Avenue and Wadsworth Blvd, a stunning 34,000 square foot building that had been custom-built for the failed luxury grocer. Upon conclusion of the negotiation of the lease document to be signed within a matter of hours, the equipment lender called their prospective borrower, stating they had the right to tear up the commitment letter unless the prospective borrower agreed to an interest rate increase: from the previously agreed-upon 6% to 16%. Being the sophisticated group REC's client was, they said no. We hope they actually said, "hell no!"
We all collectively started a blitz to lending contacts, explaining the situation and asking who could offer a solution. After preliminary review of financials, one lender told us they could offer the loan. They sent their chief credit officer for a tour of the company's existing location and, with favorable reviews, asked for 30 days to fully underwrite the deal. The landlord graciously agreed to give us this extension. That lender came back on the 30th day with terms much worse than the solution promised. In the interim, we had left no stone unturned, and closed this chapter without a viable option to revive the deal.
REC exists to represent buyers and tenants only and to help them execute plans that support their best interests. That includes the hard talks about when it's time to walk away. With more interest rate rises on the horizon, we stand ready to strategize with our clients to help them make real estate decisions that ensure their futures remain bright.
When REC started working with an established bouldering gym to find a new location, they had already received signed term sheets from two lenders, one of which would provide an SBA loan for the interior buildout and another from an equipment finance company to provide a loan for the $750,000 bouldering wall itself. Climbing and bouldering walls are more unusual subjects of equipment loans because (a) they have no serial number and (b) there is a relatively limited market for the lender to sell it upon the borrower's possible default.
We proceeded with our search and negotiated a ten-year lease for the former Lucky's Market at 38th Avenue and Wadsworth Blvd, a stunning 34,000 square foot building that had been custom-built for the failed luxury grocer. Upon conclusion of the negotiation of the lease document to be signed within a matter of hours, the equipment lender called their prospective borrower, stating they had the right to tear up the commitment letter unless the prospective borrower agreed to an interest rate increase: from the previously agreed-upon 6% to 16%. Being the sophisticated group REC's client was, they said no. We hope they actually said, "hell no!"
We all collectively started a blitz to lending contacts, explaining the situation and asking who could offer a solution. After preliminary review of financials, one lender told us they could offer the loan. They sent their chief credit officer for a tour of the company's existing location and, with favorable reviews, asked for 30 days to fully underwrite the deal. The landlord graciously agreed to give us this extension. That lender came back on the 30th day with terms much worse than the solution promised. In the interim, we had left no stone unturned, and closed this chapter without a viable option to revive the deal.
REC exists to represent buyers and tenants only and to help them execute plans that support their best interests. That includes the hard talks about when it's time to walk away. With more interest rate rises on the horizon, we stand ready to strategize with our clients to help them make real estate decisions that ensure their futures remain bright.
© 2019 Real Estate Consultants of Colorado, LLC