LEM Closes Fixed to Floating Bridge Loan

LEM Mezzanine, a direct lender providing mezzanine loans, preferred equity and high leverage first mortgage bridge loans, recently closed a $39 million bridge loan for the refinance of an 11-property multifamily portfolio located in Los Angeles, California. The loan was structured with three years of fixed-rate financing and two 1-year floating-rate extensions. This was a turnaround opportunity as the going-in debt service coverage was below a 1.0x. LEM was able to underwrite and close this deal based upon strong local sponsorship, positive market dynamics and the potential for significant upside in net operating income.

The fixed to floating structure allowed the borrower to lock in favorable fixed rate financing while undertaking an aggressive renovation program that would result in increased rents. The floating rate extension period then provides flexible prepayment while giving the borrower additional term, should it be needed, in order to fully execute the business plan. Overall, the sponsor enjoys the benefits of both fixed and floating rate financing.

"This transaction highlights LEM's ability to utilize its balance sheet in providing our clients with creative and flexible financing solutions," said Herb Miller, a Partner with LEM.

LEM, a series of private equity funds with over $450 million of equity, provides mezzanine financing from $1 million to $20 million and first mortgage bridge loans from $15 million to $50 million for commercial and multifamily properties nationwide. LEM writes larger deals if they involve a portfolio of assets or special situations. In general, non-recourse financing is available for up to 90% LTV with terms of up to 10 years. LEM also specializes in providing financing in transactions where there is existing first mortgage debt.