Deal at a Glance
| Loan Amount | $2,400,000 |
| Property | Single-tenant net-leased bank branch |
| Location | Martinez, California (Contra Costa County) |
| Borrower | Out-of-state family living trust |
| Lender | a bank |
| Rate | 3.375% fixed |
| Payment Structure | 119 payments of $10,675.22, then a final balloon payment |
| Maturity | 10 years (September 17, 2031) |
| Minimum DSCR | 1.35x |
| Prepayment Penalty | 3% (years 1-5), 2% (year 6), 1% (year 7); waived on sale |
| Guaranty | Unlimited personal guaranties from both trustees |
| Closed | September 2021 |
The Deal That Walked in the Door
We are Commercial Lending Solutions, a commercial mortgage brokerage based in Los Angeles, and this deal brought us an out-of-state family trust, based in Texas, looking to finance a single-tenant bank branch property in Martinez, California, in the East Bay. Financing an out-of-state buyer into a California net-lease asset meant building an underwriting story around the strength of the tenant and location rather than the trust's local footprint.
A net-leased bank branch is a straightforward asset on paper, but getting a regional bank like a bank to move quickly for a trust with no California presence still required careful packaging of the tenant credit, lease terms, and trustees' financial standing. Commercial Lending Solutions specializes in net lease financing and out-of-state trust lending for investors acquiring commercial property in California.
What Made It Hard
- An out-of-state borrowing trust. With the trustees based in Texas and no existing California banking relationship, we had to build a complete underwriting package from scratch rather than lean on an established local track record.
- Balancing amortization against a 10-year balloon. Structuring 119 level payments against a full payoff at maturity meant the trust needed clear visibility into its refinance or sale exit well before the loan came due.
- Meeting the lender's ongoing coverage covenant. A minimum 1.35x debt service coverage requirement meant the net lease's terms had to support that cushion cleanly, not just clear the bar at closing.
How We Ran the Process
Trevor Damyan, a California-licensed real estate broker (CA DRE 02244836), placed the loan with a bank, closing with a note dated September 17, 2021:
- $2,400,000 secured by the bank-branch property in Martinez, California
- 3.375% fixed for the full term, calculated on a 365/360 basis
- 119 monthly payments of $10,675.22, followed by a final balloon payment of the remaining principal balance at the 10-year maturity date
- A minimum 1.35x debt service coverage ratio maintained for the life of the loan
- A declining prepayment penalty of 3% in years one through five, 2% in year six, and 1% in year seven, waived entirely in the event of a sale
- Unlimited personal guaranties from both trustees of the borrowing family trust, with full payment and performance obligations rather than limited or capped exposure
The loan closed with the trust's California acquisition fully financed and its Texas-based trustees standing behind the loan as unlimited guarantors, giving the bank the coverage cushion and recourse it needed for an out-of-state borrower.
"An out-of-state trust with no California track record can still get a bank comfortable fast, as long as the tenant credit and lease terms do the talking instead of the borrower's local history."
Why We Won This One
Building a clean underwriting package around the tenant credit and net lease terms, rather than the borrowing trust's local track record, is what got an out-of-state trust financed quickly on a California asset. A single-tenant bank branch on a long-term net lease gives a lender a straightforward income story to underwrite, and presenting that clearly kept the file moving despite the trust having no prior California banking relationship.
Locking in a 3.375% fixed rate with a declining prepayment schedule that steps down to zero on a sale also gave the trust real flexibility heading into the back half of the 10-year term, rather than boxing them into a rigid structure on an out-of-state hold.
Is This Structure Right for Your Deal?
If you're an out-of-state investor looking to finance a net-leased commercial property in California, we can help you build the underwriting story a lender needs to move quickly. We arrange permanent loans and owner-occupied commercial loans from a network of more than 1,000 capital sources.
Apply for financing or call us at 310.708.0690 to talk through your acquisition.
This is one of 46 closings we have arranged across California from our Los Angeles office. See our California commercial financing page, or browse all California closed deals.
Trevor Damyan is a commercial mortgage broker at Commercial Lending Solutions with a background in structured finance at CBRE and Marcus and Millichap Capital Corporation. He specializes in bridge loans, construction financing, SBA programs, DSCR loans, and complex capital structures for investors and developers across all 50 states.
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