The referenced property is a 125,500 SF office building located in an area just west of downtown Los Angeles. The building has zoning and entitlement rights for a hotel and the borrower is interested in repositioning the property as a flagged hotel or a mixed use property comprising hotel, apartments/condos, and live/work units. In addition to these options, the borrower could re-lease the building as an office building. Office leasing in this area is strong and there is a shortage of hotels in this area, which confirm borrower’s business plan. In 2015, a fire on the 5th floor of the building required all of the building’s tenants to vacate the property. The borrower is responsible for the repair work, which is estimated to be $1,000,000. iBorrow has structured this loan so that the $500,000 holdback is released after the borrower posts $500,000 toward fire damage repair. Also, iBorrow will be holding back an additional $1,000,000 in interest reserve. An additional interest reserve will be paid in by borrower in month five (5) of the loan term. The insurance company has total coverage of $3,000,000 to cover tenant damages, even though it is estimated that total compensation will be approximately $500,000. Nevertheless, the seller has agreed to indemnify the buyer and lender for all tenant damages.
Koreatown, Los Angeles, CA