Dealmaker: MetroGroup Secures $23M for California 1031 Exchange

(San Bernardino, Calif., office park)

MetroGroup Realty Finance, Newport Beach, Calif., secured $22.6 million in financing for a southern California 1031 exchange transaction.

Ivan Kustic, Vice President at MetroGroup, arranged the financing, which included a $7.6 million non-recourse loan for a 62,000-square-foot multi-tenant office building in Corona, Calif., and a $15 million non-recourse loan for a 178,000-square-foot multi-tenant office park in San Bernardino. The loans closed at interest rates in the high 4% and low 5% range, respectively.

“The borrower recently sold an industrial property in Monrovia, Calif., and was seeking reliable financing terms in order to secure the trade property and  take advantage of a 1031 exchange opportunity,” Kustic said. “The attractive yields for these assets coupled with the strong fundamentals and projected growth of the Inland Empire market made these office investments worthwhile for our client.”

MetroGroup Vice President J.D. Blashaw noted interest rate hikes and the recent deal flow slowdown have made it harder to secure low, fixed-rate refinancing for commercial assets. “Yet, there are still opportunities for investors looking to leverage their cash, diversify their portfolio, and increase their purchasing power,” he said. “The flexibility and leverage provided by a carefully structured 1031 exchange can give investors breathing room to reassess before they make their next move while increasing cash flow and often alleviating management headaches.”

The loan to support the acquisition of the Corona asset had a 60-day rate lock and 25-year amortization. The loan for the San Bernardino property had a 75-day rate lock and 30-year amortization.