Refinancing a NNN

[Maya S.]

I have to refinance my NNN as I'm getting close to loan maturation May 2025 (balloon payment).

Currently @ 4.5%. My tenant (investor grade) has 3 more years left on the lease. I've talked to them to find out if they are willing to extend the lease now to help with financing. 

They've given different options and all to their benefit mostly. I've also talked to my current lender and we decided to wait till we get closer to maturation in hopes the rates will go lower. 

I have equity and it seems the tenant will be renewing their lease in 3 years. But also if I'm able to make a deal with the tenant for an early 10 year lease renewal I have the option to sell and reinvest.

Any help from you experts in the field would greatly be appreciated

[Joshua Gorsky]

@Maya S.

In representing both lenders and borrowers, I’ve seen some solutions other than tenant signing an extension prior to closing.

For example:

- Lender drops the LTV to account for additional risk.

- Tenant agrees to either start the loan with recourse, with it burning off after the extension is signed, or start the loan as non-recourse with a springing trigger if tenant does not sign the extension soon by a certain deadline.

- Lender requires a heavy TI/LC reserve until the extension is signed.