The Property and Casualty Initiative, LLC. Paula Alves Zaiken Vice President February 3, 2011 presentation to:. About PCI. State wide community loan fund Established in 1999 as the result of state legislation Funded by fourteen Massachusetts-based property and casualty insurance companies
Paula Alves Zaiken
February 3, 2011
Flexible financing for businesses, developers, and community organizations
small and medium-sized
Family Dental Practice
The Problem: A well-established family dental practice had been occupying leased space in a small strip mall for several years. Imbedded in the lease was an option to buy the entire mall for $1. 6MM, a price the business owner considered attractive. Her bank, however, was faced with a number of challenges that had the loan “stuck” in the credit process. Specifically, 1.) no money down, and 2.) bank’s RE group not satisfied with appraisal.
SBA programs were not an option since the borrower occupied only 30% of the real estate.
The PCI Solution: PCI approved a $600M second mortgage behind the bank’s $1MM first mortgage. PCI’s loan brought the transaction to 88% LTV based on the available appraisal and the bank loan, in turn, was well within 75% LTV maximum that was bank policy.
Special Needs School
The Problem: A regional school for special needs children planned to construct a new 28,000 s.f. two-story building on existing school land to enable the school to expand services and eventually double the current student population. The cost of the project was $5.3MM. The school’s bank obtained approval for the loan at 50% of loan need, or $2,650,000 and sought a participant for the 50% loan balance. They approached a number of small local banks who expressed interest only at insufficient amounts, and then partnered with a quasi-public that subsequently approved the full $2,650,000 amount. A problem arose however, in that neither the Bank nor the Borrower wanted floating rate exposure during the tenor of the loan. The quasi had only floating rate funding to offer.
The PCI Solution: PCI turned around the loan request in 10 business days from initial phone call to full commitment. PCI matched the Bank’s fixed rate pricing, and in addition offered the Borrower the benefit of prepayment without penalty.
Project with Not-for-Profit Lessee
The Problem: An experienced developer sought a construction loan from one of its relationship banks (25+ years) for the construction and build-out of 32,000 sf of space in an empty Boston building that he had owned for many years. The project’s timing was crucial since the developer had signed a lease with a not-for-profit that had a narrow timing window to relocate. The bank declined the loan partially because of discomfort with the lessee.
The PCI Solution: PCI identified that the project could be split into two phases, only one of which was urgent. We approved a Phase I loan of $4.6MM based on the single lease in place and adequate cashflow for debt service. PCI approved its commitment in under 4 weeks.
Tax Exempt Bond - NMTC Deal
The Problem:The relationship bank of an established Boston based college obtained approval of $18MM in financing for the renovation and construction by the college of a new center for the arts. The financing involved New Market Tax Credits and a proprietary loan structure. The bank’s credit committee approved a hold limit of only $10MM, therefore an $8MM participant was needed.
The PCI Solution: The bank invited PCI to take a $5MM participation in the loan based on:
The Problem: A neighborhood CDC in partnership with a for profit developer wanted to take advantage of the opportunity to buy a parcel of underutilized industrial land for a mixed income housing development. They needed a patient lender who would stand-by while they arranged for project financing from multiple sources.
The PCI Solution: PCI approved a $2.55 MM interest only acquisition loan and subsequently partnered with a bank to provide construction financing for 109 rental and homeownership housing units. The loan was repaid with proceeds from a Mass Housing Partnership – MHP permanent mortgage.
Investment Committee Approval
Paula Alves Zaiken
Stacey Parks Townsend
PCI - The Property and Casualty Initiative, LLC
211 Congress Street, 4th Floor
Boston, MA 02110