ValueXpress has arranged a $7,005,000 CMBS conduit loan for the purchase of a portfolio of 7 retail properties net-leased to Dollar General for an initial term of 15 years with five 5-year renewal options thereafter. The purchase was part of a successful 1031 tax-deferred exchange for the sponsor. The transaction was structured in two parts: an initial funding of $5,955,000 secured by six of the properties and a $1,050,000 subsequent funding on completion of construction of the seventh property. Six of the properties are located in small communities throughout Tennessee, while the seventh property is located in Enterprise, Alabama.
The key to the transaction is new 15-year leases at each Dollar General location. This lease structure is superior to the 10-year leases offered by Dollar Tree and Family Dollar, Dollar General competitors, and allowed for a 10-year loan term and a 25-year amortization term for the subject loan. The 5 years remaining on the leases at loan maturity will likely be long enough for the sponsor to obtain recourse community bank financing to pay off the CMBS conduit loan financing at maturity in 10 years.
“The sponsor was very happy with the loan execution,” commented Gary Unkel, Senior Loan Originator at ValueXpress. “The sponsor was concerned that with multiple properties and locations, the logistics of the financing would not allow for closing prior to the 1031 expiration, but we got it done.”