Louisiana Hard Money Deal - Active

600

3 deals

Yes

Baton Rouge

Louisiana

$53,000,000

$16,000,000

This is for a Class "A" office building in Baton Rouge, LA on a 99 year ground lease. Being purchased for $53 million, there is a current appraisal for $56.6 million and the borrower is looking for $37 million. The real estate is outstanding - great location, excellent tenants, very attractive structure.
Everything about this deal in a different market environment would be great. There are 3 challenges - first it is in Baton Rouge which, if you look into it, you will find is a surprisingly good market and is the capitol city (market occupancy is 90% which is not yet reflected in some market data as there are two large buildings being converted from office to residential and that is making the difference). The property is expected to be 95% or more occupied by closing. Second is that it is office which is not the favored asset type currently. Third is that it is on a 99 year ground lease but the ground rent represents less than 14% of the NOI whereas others like this the ground rent can be 25-30% and more of the NOI. In addition, one of the LPs in the deal is an overseas fund with $16B in AUM and they would provide a take out commitment 24-48 months after closing (their regulations prevent them for making a loan except on a seasoned property that they have been involved with otherwise we would get the loan from them. They will be a 20% partner in the ownership).