The Deal
Commercial Lending Solutions arranged a $13.8M permanent loan for a suburban office building in Santa Clarita, CA. The building was 87% leased to a diverse roster of professional services, healthcare, and technology tenants with staggered lease expirations reducing single-year rollover risk. In-place NOI was strong relative to debt service requirements, and the property had maintained stable occupancy for five consecutive years through active asset management. The borrower sought long-term fixed-rate financing to lock in the low-leverage basis and reduce refinancing exposure.
The Challenge
The broader office sector was experiencing lender hesitancy driven by remote work trends and elevated vacancy in major urban cores. While the property in question was a well-occupied suburban asset with necessity-based tenants, most traditional lenders were applying blanket restrictions on office financing regardless of property quality, submarket, or tenant profile. Several lenders the borrower approached cited internal credit policy restrictions on office exposure, resulting in no-bid responses from institutions that would previously have been reliable capital sources for this type of asset.
The Solution
Trevor Damyan at Commercial Lending Solutions identified a lender that had maintained an active office lending program with underwriting criteria calibrated to suburban, multi-tenant assets rather than the large-format urban office product driving sector headlines. The loan was structured at 55% LTV based strictly on in-place NOI at the time of closing, with a 5-year fixed rate and 30-year amortization. The lower LTV reflected the lender's conservative approach to office sector exposure while still providing sufficient proceeds to meet the borrower's payoff and equity extraction objectives.
The Outcome
The financing closed with a competitive fixed rate reflecting the property's actual income performance and low leverage, rather than a broad sector discount applied by lenders with blanket office restrictions. The 5-year fixed term provided rate certainty through the borrower's planned hold period, and the amortization produced strong debt service coverage comfortable to both lender and borrower. The borrower retained the asset in their portfolio and continued active leasing efforts that subsequently pushed occupancy to 93% within 18 months of closing, increasing the property's equity value and positioning it well for future refinancing at improved terms.