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Recent Closing: Mattress Firm purchase in Nevada

Monday, Feb 02, 2015
by Jeff Meierhofer

The Madison Group (TMG), a commercial broker and loan consultant, has facilitated the financing for the purchase of a newly constructed Mattress Firm in Las Vegas Nevada.  Mattress Firm has been increasing its quality of credit and opening new stores throughout the US. They have not been able yet to reach a credit grade BBB- or greater, but TMG brought a lender that was able to use the financial strength of the borrower in combination with an excellent retail location to provide high leverage financing.
The biggest challenge was that the previous lender involved was not able to commit to closing by year end. The Madison Group, along with a very motivated and capable lender, was able to get the transaction done and met the borrower’s needs for a timely closing before year end of 2014.  There were a few technical questions with the city concerning parking and signage which were a brief hurdle, but the experienced borrower was able to work through the details with his commercial broker and sellers.

The borrower’s best execution for the loan was a Swap product fixed for 10 years. This allows great flexibility for the future of debt structure and met the borrowers investment return needs. The rate was 4.66% fixed for 10 years on a 25 year amortization. The Swap alternative allows the borrower to hedge against future higher rates while receiving an excellent fixed rate. The flexible prepayment option was another factor that made this a win for the borrower. The debt is portable to another property in the future and borrower recognized the benefits of utilizing a Swap for his future financial needs. If the rate stays low, he will hold the great rate. If rates go up, he has multiple options.
The property is located in a vibrant retail location in Las Vegas.  Mattress Firm executed a longer than standard 15-year lease that commenced at completion of the building.   The lease has 10% rental increases every 5 years with two 5-year options. The lease is signed and guaranteed by Mattress Holding Corp, a Delaware corporation, and the largest bedding retailer in the US with over 1,500 locations across 36 states.

“This is an excellent new concept by Mattress Firm and the borrower is a very capable commercial real estate investor. Those things were necessary to meet the timelines and get the loan funded by the end of 2014. We are working on the next transaction with the borrower and intend to reduce the timelines to avoid any last-minute hiccups – as was experienced by the borrower with his previous lender.

The financing was arranged by Jeff Meierhofer, Director of Finance at The Madison Group.

The Madison Group is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including:  multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States.  Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital.  TMG works efficiently and effectively to get the transaction closed and funded.