Ben van der Meer
Sacramento Business Journal
Real estate investor Ethan Conrad has gotten new financing to rehab three Sacramento-area properties.
Conrad secured $11.5 million through Los Angeles-based Continental Funding Group by refinancing the properties, which he previously acquired in all-cash deals. They include a mix of office and retail locations that include commercial buildings at 1401 El Camino Ave. — a five-story, 45,000-square-foot building in Point West — and 9310 Tech Center Drive — a two-story, 54,000-square-foot building in Rancho Cordova. Retail center Coloma Village, on 3.52 acres at 11070-11082 Coloma Road in Rancho Cordova, is also part of the refinancing.
In a press release, J.M. Grimaldi of Continental said it isn’t easy to find refinancing for what are considered distressed assets in secondary markets. In the last seven years or so, Conrad has specialized in buying distressed properties, often from banks or other lenders, and making investments to turn around their fortunes.
According to Grimaldi, Conrad originally sought to get bridge debt just for the office properties, to begin a value-add strategy. Because those properties had significant vacancy, though, adding more stabilized Coloma Village to the package made the financing easier to get.
“By financing this as a portfolio, we were able to increase the blended occupancy and debt coverage ratio, leveraging the high-performing asset in order to achieve a total loan-to-value of 65 percent,” Grimaldi said.
Conrad initially will get $8.03 million out of the refinancing deal, with the rest to come later as new leases are signed at the properties. Packaging the properties also enabled Conrad to get cheaper terms than with bridge financing, Grimaldi said.
In addition, Conrad said in an email that he plans to get refinancing for 11 other properties from Standard Life Insurance within the next month.