- What Geocell has received $15.1m of debt backed by its industrial property
- Why The company wanted to repay an existing loan that carried a higher interest rate
- What next The company will use part of the proceeds to fund its expansion
Meridian Credit Union has refinanced an industrial property using a creative structure that resulted in a significantly lower interest rate and a better covenant structure for borrower Geocell Canada, Green Street News can reveal.
The lender provided $15.1m of asset-level debt backed by the 90,000 sq ft property at 1040 Jayson Court in Mississauga, Ont., close to Toronto Pearson International Airport and Highways 401 and 403. The loan was funded in two tranches, with the latest closing in July. Finneo advised Geocell on the financing.
Geocell occupies most of the property, and the rest is leased to tenants. The main challenge in arranging the financing was that the rent revenue was not enough to service the desired loan amount.
Geocell engaged Finneo’s debt advisory team, which canvassed more than 30 lenders to source and structure financing options. There was strong interest in financing the asset from several lenders at varying levels of loan amounts, interest rates, fees, amortizations and covenant structures.
Ultimately, Meridian was able to mitigate perceived financing risk using a financing structure proposed by Finneo. Meridian wrote a $12m first mortgage with 25-year amortization secured by the property and an additional $3.1m of financing collateralized by the assets of the operating company.
The borrower is said to have wanted to repay more expensive debt it received when it purchased the Mississauga property three years ago. As part of the refinancing, Geocell’s annual rate was cut to 6.4% from 13%.
Finneo used its technology and lender-loan tracking platform to narrow financing options for Geocell. The process took only six weeks from the issuance of letters of intent to commitment to funding.
