THE PROPERTY

Sunnybrook is an 18-unit townhome community located in Greenville, North Carolina. The borrower originally built the asset from the ground up in 2022, creating a highly desirable, newly constructed product in the local market.

THE CHALLENGE

The sponsor was facing an impending maturity on their existing permanent bank loan, which carried unfavorable terms, and needed to close the transaction quickly to avoid complications. The borrower’s primary objective was to execute a cash-out refinance to monetize the equity created from the 2022 build. However, given current market conditions, maximizing absolute leverage under standard terms threatened to put too much pressure on the property’s monthly debt service.

THE SOLUTION

To ensure the best possible outcome for the client, we strategically pivoted our approach to adjust the terms and leverage. This restructuring was critical to maximizing the borrower’s ongoing cash flow while still successfully delivering over $700,000 in cash-out proceeds.

To execute this, we took out the sponsor’s existing bank debt and replaced it with an interest-only loan. To balance immediate stability with long-term flexibility, the loan was structured to remain fixed for the first 7 years before transitioning into an adjustable-rate mortgage (ARM). Crucially, the new loan provided the borrower with the option to pre-pay a portion of the principal with no penalty at their discretion, giving them ultimate control over their debt reduction.

THE RESULTS

• Loan Type: Cash-Out Refinance
• Property: 18-Unit Townhome Community
• Structure: Interest-Only Loan (7-Year Fixed to ARM) with flexible principal pre-payment options
• Execution: Replaced unfavorable permanent bank debt on a compressed timeline
• Proceeds: Over $700,000 in cash-out

SUMMARY

This transaction highlights the importance of adaptability when structuring commercial debt. By pivoting our strategy to prioritize an interest-only structure and a tailored term length, we successfully retired the borrower’s maturing debt without delaying the closing process. Ultimately, the sponsor secured long-term stability, achieved highly optimized monthly cash flow, and monetized their equity with significant cash-out proceeds while maintaining the flexibility to pay down principal on their own timeline.