An experienced real estate investor turned to PMC for a foreclosure takeout on a B-class retail asset. The Sponsor had purchased the asset, located in a Chicago suburb, several years prior with a CMBS loan. To complete tenant improvements, the Sponsor took out a $1mm loan with a local hard money lender, who secured their interests through unrecorded pledges of membership interests. The Sponsor ran into difficulties paying interest on the mezzanine loan and fell into default. The hard money lender recorded their pledges, pushing the Sponsor’s CMBS debt into default as well. Accelerating their loan, the CMBS lender filed for foreclosure.
PMC worked quickly to evaluate the transaction – while the Sponsor was in a difficult spot, the asset was cash flowing well and located in a high-traffic area. PMC structured a deal providing a $3.8mm first lien loan on the asset while working with the Sponsor to secure a second lien – guaranteeing enough proceeds to take the Sponsor out of foreclosure, pay off the two existing lenders, and charting a path to success.