Options on how pull Equity out of Commercial Office Investments!

[Greg Heden]

I have several commercial office buildings(6) that I refinanced in 2018 with a portfolio loan. This loan is about (5) years into a (10) year pre payment penalty of 10%, carries a current rate of 4.76%, adjusts next April (5 year treasury + 2.76%, then static for the next 5 years).  I would like to tap the over 50% equity position without a  refi.   I have significant positive cash flow, have owned the majority of properties for over 10 years, and have excellent credit.  What options would you suggest? What type of terms/rates could I anticipate?  I do not need the cash, just looking to put it to work.  Thx in advance.

[Nick Belsky]

@Greg Heden

HELOCs aren't a common option for commercial properties. You are looking for a lender to take a stand alone second lien on equity you currently have. This can be done, but is not cheap. Expect 10-13% and Interest only or adjustable rates. Not to mention most HML will want 2-4% in fees at closing just to do the loan. The 10yr PPP is tough. Many will cross collateralize and make this work. The real question is how much are you willing to pay to get the cash and is it worth it to you...?

Cheers!