Thorofare Capital recently funded a $10,800,000 recapitalization loan for a 139,800 sq./ft. portfolio owned by an established SoCal-based real estate development and management company. The security consists of an R&D/flex-office portfolio and a Class-“B” office building in the Riverside County city of Temecula. The financing allowed the sponsor to pay off a maturing CMBS loan and subsequently fund reserves towards capital expenditures, tenant improvements, and leasing commissions. The loan was based on a strong debt coverage ratio of 1.25x+ and 12%+ going-in debt yield based off in-place NOI.

The flex-office portion of the portfolio, commonly known as Highlands I & II, consists of three single-story R&D industrial buildings with a medical office component that total 68,100 sq./ft. of rentable space. The buildings are located on two non-contiguous parcels comprising a total of 6.26 acres. The property is currently 81% occupied by 19 tenants and a number of units contain a warehouse component with 10-12 foot roll-up doors at the rear of the buildings.

The Class-“B” office building, known as Tower Office Plaza, contains 71,800 sq./ft. of space over four floors. It is situated on a 4.47-acre parcel that provides a 3.48 per 1,000 parking ratio. The property also benefits from long-term leases on the cell tower, which generates significant additional revenue. Tower Office Plaza is currently 74% occupied by 20 tenants. Notable tenants include Time Warner, Bank of America, Wells Fargo Bank, as well as a mix of lawyers, doctors and government entities.

Thorofare provided certainty of execution in a limited time frame, a non-recourse structure with an “earn-out” facility, and short-duration yield maintenance flexibility to allow the sponsorship an opportunity for a potential sale of the properties upon raising occupancy levels and adding value through exterior and interior improvements. The transaction closed in just three weeks from application.