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5-Star Mobile Home Parks
Apartments
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Assisted living facilities
Auto repair garages
Boutique hotels
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Casinos
Church financing
Congregate care
Drugstores
Walgreens
CVS Pharmacies
Rite Aid
Energy
Ethanol plants
Factories
Factory outlets
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Mobile home parks
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Regional malls
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Senior housing
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Strip centers
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Looking for a mezzanine loan? Ocean Pacific Capital is a leader in providing all types of mezzanine programs. Whether mezzanine purchase, mezzanine refinance, or mezzanine construction, our mezzanine department offers a wide variety of options. Particularly in today's tight senior debt market, mezzanine is an increasingly important capital option for growing companies. We provide mezzanine financing from $500,000.00 to $1,300,000,000.00. If you are looking for a commercial mezzanine conduit, or construction mezzanine financing in California, or any other state, with good or bad credit, we can help you find the mezzanine program that meets your unique and individual needs.

A mezzanine loan is a relatively large, unsecured loan (a loan that is not backed by a pledging of assets) with a maturity of at least five years. The loan carries a detachable warrant (the right to purchase a certain number of shares of stock or bonds at a given price for a certain period of time) or a similar mechanism to allow the lender to share in the future success of the business. Mezzanine loans are dependent on cash flow for repayment.

Mezzanine loans are similar to commercial second mortgages, except that mezzanine loans are secured by a percentage of ownership of the project, a 2nd T.D. that owns the property, as opposed to the real estate. If the company fails to make the payments, the mezzanine lender can foreclose on the stock in a matter of a few weeks. If you own the company that owns the property, you control the property. Therefore, a mezzanine loan is secured by the stock of a company, which is personal property and can be seized much faster. Mezzanine loans are large. It is hard to find a mezzanine lender who will thoroughly read through all of the required paperwork for a loan of less than $5 million. Typically, mezzanine lenders typically prefer big projects.

Furthermore, a mezzanine loan, as John C. Murray explains in his article entitled "The Mezzanine Financing Endorsement," is "a result of the increased securitization of real estate and the packaging of pools of loans for sale into the secondary market, mezzanine financing has become very popular in recent years. Mezzanine financing (or, perhaps more appropriately, mezzanine capital) fills the gap between the first mortgage financing, which usually has a loan-to-value ratio of forty to seventy-five percent, and the equity participation of the principals of the borrower, which is usually no more than ten percent of the cost of the project. Mezzanine financing commonly supplies financing of ten percent to fifty percent of the project's capital structure cost. This type of financing can take several forms. Most commonly, it involves extending credit to the partners or other equity holders of a borrower and taking a pledge of such parties' equity interests (including the right to distributions of income). Alternatively, the lender may take a preferred equity position, which is entitled to distributions of excess cash flow after debt service, ahead of the borrower's principals. A "combination" loan structure may also be used to combine a first mortgage loan with mezzanine financing at an aggregate loan-to-value ratio of ninety to ninety-five percent. This type of structure may contain a shared appreciation or contingent feature, an exit fee paid by the borrower, or sometimes, both. The borrower in a mezzanine loan is often an LLC, and the equity participant in the borrowing entity is frequently itself an LLC. In those situations where the mezzanine lender is taking a pledge of some or all of the equity interests in one or more of these entities in connection with the mezzanine loan, the lender may look to the title insurer for special forms of title-insurance coverage. The lender may seek some form of non- imputation coverage, i.e., assurance that the title insurer will not deny coverage under the owner's policy based on matters known to the borrowing entity (or its members) being imputed to the lender. Copies of endorsements offering this type of coverage are attached hereto. Title underwriters may require an affidavit and an indemnity agreement from the existing LLC members, and from the mezzanine lender when it exercises its foreclosure rights under the pledge and succeeds to an ownership interest in the mezzanine borrower. These affidavits and indemnity agreements will state that the respective parties have no knowledge of any fact that will affect the coverage under the policy, and will hold the title insurer harmless for losses resulting from its reliance on such affidavits and indemnities. The title insurer may also require, and review, financial statements from all relevant parties in order to achieve a comfort level for relying on the aforementioned indemnity. The attached endorsements state that (as agreed to by the insured and its equity members) all payments for loss under the policy will go directly to the mezzanine lender, and that there will be no denial of coverage as the result of the transfer of any of the LLC membership interests to the mezzanine lender. The endorsements further provide that the title insurer waives its right of subrogation and indemnity against any of the insured owner's equity owners until the mezzanine loan is paid in full. If a loss occurs under the policy, the amount paid by the title insurer is limited to the actual loss less a percentage thereof equal to the percentage of LLC membership interests not owned by the mezzanine lender at such time. If the loss occurs before the mezzanine lender's acquisition of the insured owner's membership interests, the mezzanine lender is not required first to pursue its remedies against other collateral. However, the title insurer's liability in any event is limited to the amount of the mezzanine loan, and the title insurer is entitled to credit for any amount paid out under a simultaneous loan policy. The title insurer is also entitled to reimbursement from payments received by the mezzanine lender from other security. The term "mezzanine lender" can be defined to include the owner of the mezzanine loan and each successor in interest in ownership of the mezzanine loan, and include any subsidiary or affiliate entity of the owner of the mezzanine loan. The availability and content of the attached endorsements will vary depending on factual and underwriting considerations, as well as statutory and regulatory restraints in certain states." Mezzanine lenders and commercial mezzanine construction lenders await our clients' application for a mezzanine loan, a multifamily or apartment construction loan, a commercial construction loan, a condo, or residential subdivision construction loan, or a land development loan.

Click here to apply now or for more information, and our recent closings, please visit our commercial loans page.

Whatever your financing needs,
we will tailor a loan that's right for you.

 


Daily Oil & Gas and Wall Street Journal News
3/30/20

Centennial CEO Accelerates Retirement
Posted on Monday March 30, 2020

Mark G. Papa has accelerated his retirement as Centennial's CEO and chairman.

Covid-19 Delays Cambo Project
Posted on Monday March 30, 2020

Siccar Point and its joint venture partner, Shell UK, have announced the deferral of the planned sanction date for the Cambo project to 2021.

Giant Oil Field Boost Is Bad for Market
Posted on Monday March 30, 2020

A torrent of oil from the giant Johan Sverdrup field may not be what the market needs right now.

US Energy Dominance Under Threat
Posted on Monday March 30, 2020

The United States' energy dominance is now under direct threat, according to six U.S. senators.

Oil Down as Broken Market Drowns in Crude
Posted on Monday March 30, 2020

Oil slumped to a 17-year low as coronavirus lockdowns cascaded through the world's largest economies.

What to Watch in the Oil Market This Week
Posted on Monday March 30, 2020

Rigzone panelists share what they will be looking for this week – and beyond.

Cairn Defers Capital Plans for Exploration, Appraisal Activity
Posted on Monday March 30, 2020

Reductions and deferrals have already been identified, representing a 23% decrease in capital expenditures.

FERC Approves Enable Midstream's Rate Case Settlements
Posted on Monday March 30, 2020

Enable now expects 2020 MRT revenues of about $87 million, an increase of $7 million compared to 2018 levels.

Oil Drops Fifth Straight Week
Posted on Friday March 27, 2020

Oil dipped amid a one-two punch from collapsing demand due to the coronavirus crisis and ballooning supply.

Basic Energy Adjusting Headcount, Closing Select Locations
Posted on Monday March 30, 2020

In addition to reducing spend it will lower annual run-rate costs by $20 million.

Wall Street Journal
Commercial News

3/30/20

WSJ.com: US Business

Trash Industry Prepares for Potential Deluge of Coronavirus Waste
As coronavirus spreads across the U.S., the trash industry is girding for a potential rise in infectious waste while grappling with concerns about workers? exposure to the pathogen.

Facebook Pledges $100 Million for News Outlets Hit by Coronavirus Outbreak
The tech giant is pledging $100 million in grant money and promised ad spending to help struggling news outlets weather the financial blow of the coronavirus outbreak.

Apple Supplier Foxconn's Profit Drops in the Fourth Quarter
Foxconn?s net profit fell 23.7% in the fourth quarter before the coronavirus pandemic struck the world?s biggest contract electronics assembler and its largest customer, Apple.

Coronavirus, Cash Crunch Send Shock Wave Through China's EV Startups
China?s army of electric-vehicle startups were once positioned to put China at the head of the global EV revolution, but the coronavirus and struggles before the pandemic threaten ruin for dozens of them.

America's Make-or-Break Week
Rent, utilities, credit card payments, payroll: The bills are now coming due for big companies, small businesses and millions of laid-off workers. How Americans navigate the next few days will shape how the coronavirus pandemic impacts the economy.

A Global Conundrum: How to Pause the Economy and Avoid Ruin
Never before have governments tried to put swaths of national economies in an induced coma and awaken them gradually. If it works, it will be a testament to the flexibility of modern capitalism. More likely, much will go wrong.

Hidden Chinese Lending Puts Emerging-Market Economies at Risk
China has lent roughly $200 billion to emerging-markets economies in recent years. Most of that hasn?t shown up in official data, allowing countries to borrow from other investors. Now borrowers are at risk of drowning in debt and investors are facing the reality that China may be ahead of them in collecting.

BRE #:00619059
Charles Elfsten, President
Charles A. Elfsten
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