The Situation
A multigenerational family office managed by the second-generation principals held eight income-producing properties across California: three multifamily assets (total 94 units), two industrial properties (total approximately 190,000 square feet), two NNN retail properties, and one mixed-use building in a primary market. Total portfolio value was approximately $48 million. Total existing debt was approximately $22 million across seven different loans with four different lenders. Two loans were maturing within 14 months. One was a 2019 vintage bank loan on a multifamily property at a rate well below current market. A third loan on one of the industrial properties had a step-up prepayment penalty that would burn off in approximately 16 months, creating an optimal refinance window.
The Challenge
The family office had no internal capital markets function. Each property had been financed independently over 20 years -- the family worked with whichever bank had a relationship at each point in time. The result was a fragmented, uncoordinated debt stack: seven loans, four lenders, staggered maturities, different prepayment structures, and no cross-collateralization or portfolio-level optimization. The two maturing loans created immediate pressure: rolling both to new bank loans at current rates would increase annual debt service by approximately $215,000 compared to the in-place rates. The family's real estate attorney recognized the refinancing pressure and recommended engaging a commercial mortgage broker for a portfolio-level review rather than bank-by-bank renewals.
Our Approach
Commercial Lending Solutions conducted a full portfolio audit: appraised value (using broker price opinions on each asset), in-place loan balances and rates, maturity and prepayment schedules, in-place NOI, DSCR at current rates versus new market rates, and LTV headroom. The audit identified three recommended actions: First, the two maturing loans: the multifamily was strong enough for Fannie Mae small balance agency financing at 75% LTV, 10-year fixed, non-recourse. Annual debt service savings versus bank renewal: approximately $68,000 on a $3.4 million loan. The second maturing loan was on a NNN retail property with a creditworthy national tenant; we targeted life company financing at 60% LTV, 15-year fixed, the lowest available rate in the market for that risk profile. Second, the industrial property with the burning prepayment penalty: we advised the family to wait the 16 months and then refinance. We committed to being available at that time. (No deal today, but a relationship cemented for a future transaction.) Third, the cross-collateralization opportunity: two of the multifamily properties could be cross-collateralized under a single agency loan at a larger balance, improving the rate by approximately 15 basis points due to loan size pricing advantages. We ran competitive processes on the two maturing loans simultaneously and delivered three competing term sheets on each within 15 business days.
The Outcome
The Fannie Mae small balance loan closed on the multifamily at $3.4 million, 10-year fixed at 6.05%, non-recourse, 30-year amortization. Annual debt service: approximately $245,000. The in-place bank loan at renewal would have been approximately $313,000 at current bank pricing. The life company loan closed on the NNN retail property at $2.1 million, 15-year fixed at 5.85%, non-recourse. Annual debt service: approximately $178,000 versus an estimated $224,000 bank renewal. Combined annual debt service savings: approximately $114,000. The cross-collateralization on the two multifamily properties is in process for the following year. The family office now has a single commercial mortgage broker relationship managing their capital markets function across the entire portfolio on an ongoing basis.
Key Takeaway for family office managers
Family offices with multi-property portfolios typically have fragmented, uncoordinated debt stacks built up over years of one-off transactions. A portfolio-level audit by a commercial mortgage broker -- examining maturities, prepayment schedules, rate optimization, and cross-collateralization opportunities simultaneously -- often identifies six-figure annual savings that no single bank relationship would surface. The broker's value is the portfolio view.
A note on figures: All dollar amounts, rates, timelines, and specific details in this case study are illustrative and based on hypothetical scenarios representative of the types of transactions Commercial Lending Solutions arranges. They are not descriptions of any specific client, property, or transaction.