Presence Health: Chicago Medical Facility

Facility Highlights

  • Ambulatory care center and medical office building
  • Tenant already had a lease negotiated with large Midwest-based developer, but needed an additional $23 million of improvement funding
  • Constructed on a ground lease owned by the tenant and adjacent to tenant’s own hospital campus
Presence Health

Transaction Summary

  • Tenant asked the developer to provide the additional $23 million in TI funding to be financed into the rent/lease
  • Senior lender did not want to add more money to the loan and the developer did not want to lay out $23 million in equity
  • SVN|Angelic created a loan structure of unrecorded mezzanine financing  with an intercreditor agreement between mezzanine and senior lenders
  • SVN|Angelic funded this at a rate competitive with the tenant’s borrowing rate, however there was no tenant guarantee on the loan
  • The loan was non-recourse to the developer, and the only lender’s collateral was the right to a certain portion of monthly rent which will pay the loan off over 10 years
  • Since funding, the tenant has merged twice, ultimately becoming part of the largest hospital operator in the U.S.
  • Developer sold this property as part of a $600 million portfolio to a single buyer, and SVN|Angelic facilitated the assumption of this loan as part of that transaction

Key Benefits

  • SVN|Angelic’s unique loan structure satisfied the needs of the tenant, developer, and senior lender, while still being a low-cost loan
  • The loan structure has adapted through two corporate mergers and a property sale