Life Insurance Company
Park Technology Center is a 145,700 square foot light industrial property located in north Denver atd 124th and Huron around 1 mile west of I-25. The four-building property was constructed in 2001 and is currently 98% leased to a variety of local and regional tenants. It was built by the seller, an industrial REIT and was institutionally maintained in excellent condition. Park Technology Center was purchased for $19,200,000 in late December. No tenant occupied more than 10% of the property and the seller did an excellent job of staggering the lease expirations over the next 7 years.
The buyer’s business plan was to hold the property for 7-10 years, roll rents to market and make some capital improvements over time. Their financing objective was to maximize loan proceeds and interest only (which typically move inversely) at the lowest market rate. Time was of the essence as the transaction needed to close in less than 55 days.
As Essex originates and services loans for the the largest number of insurance company lenders in CO, we were able to create a strong competition and provided multiple options with insurance company lenders offering non-recourse terms. The winning lender, an exclusive correspondent lender Essex has represented for 25 years, provided a 10-year fixed rate loan at 70% of the purchase price with 3 years interest only followed by a 30-year amortization. The borrower locked the rate at the floor rate when they signed the loan application which eliminated any interest rate risk during due diligence. The Loan Commitment was delivered in 20 days and the loan closed 55 days later on the contract closing date. No leasing capital or capital improvement reserves were required and the lender waived insurance impounds at closing.
The Park Technology Center acquisition financing is a great example of what insurance companies can provide which was significantly superior to what a bank or CMBS lender could offer. Banks couldn’t quote non-recourse proceeds over 60% of the purchase price and CMBS lenders all required on-going leasing capital reserves. The borrower was opposed to on-going leasing capital reserves as many experienced investors are due to the often painful and time-consuming process of getting reserves reimbursed. The banks and CMBS lenders couldn’t compete on the combination of lowest rate and maximum interest only at the highest loan proceeds. Essex Financial Group has been this insurance company’s #1 loan correspondent originator in the country for the past 2 years.