Property Type Storage
Date January 25, 2023
Permanent, Long-Term Loans for New Faculties in San Jose and Hercules Point to Relevant Options at Manageable Rates in Current Market Climate
San Francisco, Calif. (January 25, 2023) – Gantry, the largest independent commercial mortgage banking firm in the U.S., has secured $25.4 million of permanent, construction take-out loans for a pair of new-build self-storage facilities in the Bay Area communities of San Jose and Hercules, Calif. Both properties were pre-stabilization at time of financing. The two separately owned, new construction properties include a 88,403-square-foot SAF Keep facility in San Jose, and a 98,323-square-foot StoreLocal facility in Hercules.
Gantry’s Tom Dao, Principal, and Erinn Cooke, Associate, with the firm’s San Francisco production office completed the financings on behalf of two borrowers, both private real estate investors. Each loan was placed with different lenders from Gantry’s roster of correspondent life companies. The fixed rate, permanent loans for the San Jose and Hercules facilities were for 10- and 25-year terms, respectively.
Notably, due to firm’s seasoned lender relationships and strong underwriting, Gantry was able to secure permanent loan financing, which typically requires 90%-plus occupancy status, when San Jose was at 75% and Hercules at 30% occupancy, to stabilize the assets for final lease up.
According to Gantry’s Tom Dao, “For projects that started when construction loans were in the 3% range, it becomes a challenge when completion take-out financing is in the 6% range. Developers who are focused during underwriting, conservative on debt load and realistic about rent projections plan for these exit scenarios. Gantry consulted with both these developers on their construction financing, providing input on exit strategy from the outset of development. We review various refinancing strategies with our clients at all points in the construction process to anticipate or reassess adjustments in market conditions in order to manage the project’s exit strategy. For both these projects, this approach allowed us to underwrite permanent debt even when the properties were not fully stabilized or seasoned.”