Aries Conlon Capital is pleased to announce that the firm has closed on a $1.9 million, non-recourse, CMBS permanent loan for Security Storage. The site includes 361 storage units, and approximately 17,000 square feet of office/warehouse flex space located at 1650 Barlow Street in Traverse City, Michigan. Aries Conlon Capital Senior Vice President Mac Dobson, based in Ann Arbor, Michigan, arranged the financing on behalf of the property’s owner, Jim Harvey.
Aries Conlon Capital closed the 10-year fixed rate loan at 70% loan-to-value with a 30-year amortization. The borrower refinanced an existing, floating-rate SBA 7(a) loan to the lower fixed-rate non-recourse loan. In addition to dramatically reducing his rate, the loan allowed Harvey to access trapped equity in the property that he plans to invest in inventory for another business venture, Traverse City Wedding and Party Rentals. By removing recourse, the borrower has freed up his personal balance sheet and created capacity to put on future SBA or other conventional financing to grow his portfolio.
“SBA lenders have financed a lot of self-storage in the last five years, and the vast majority have been floating rate SBA 7(a) loans tied to the ever-increasing prime rate,” said Dobson. “Many of these storage owners closed their loans when Prime was 3.25%, but it’s now 4.75% and expected to continue moving upward over the next 12-24 months. We’re active in placing SBA loans because they provide up to 90% financing, but once an owner has stabilized the property and created equity, it’s time to lock into a lower interest rate and monetize the value. That’s exactly what Jim did here.”
“Mac made this process so easy for me. His extensive knowledge of this industry allowed me to do my business as usual while he navigated me effortlessly through a process with which I was unfamiliar,” said Harvey.
Aries Conlon Capital Associate Vice President, Prabhat Jayara assisted with the transaction underwriting.