NBS Financial Services’ Mike Wood, Principal, Director of Seattle Production has arranged $39 million in acquisition financing for a 210,321 sf FedEx industrial property in Redmond, Washington.
State Farm Life Insurance, located in Bloomington, Illinois, is the lender. The transaction proved to be challenging in regards to the fact that it was a single non-investment grade tenant requiring a high loan per square foot at approximately $185. This is a sharp contrast to the typical $100-150 valuation for industrial product, Wood said. In addition to these challenges, FedEx Corporation didn’t guarantee the lease as the tenant is only a subsidiary.
Despite these challenges, Wood was able to structure the loan with a 20-year term and 20-year amortization and the borrower locked in a sub 4 percent interest rate.
“The borrower requested a long-term fully amortizing loan in order to lock-in a low interest rate and avoid refinancing,” Wood said. “If the buyer sought the same deal in the current market, the rate today would be an estimated 100 basis points higher.”