$2.95M Bank-Owned Office: Equity Acquisition and Master Lease

The Owner's Problem

Despite a reported $3 million renovation, the building was vacant and lacked the cash flow needed for a bank extension. The existing loan matured and the bank foreclosed. A possible repurchase by the former owner faced unresolved bankruptcy and title-related complications, making a new loan to that owner an unsuitable path.

The Helvetica Solution

Helvetica changed the structure from proposed lending to a direct acquisition from the bank. The original capital plan totaled $2,950,000: $1,365,000 for the purchase, $130,000 for closing costs, $1,400,000 for tenant improvements, and $55,000 for working capital. The $2.95 million figure represents the full project capital plan, not a loan principal balance.

The summary reported an as-is appraisal of $3.82 million and a stabilized value of $5.9 million. Its 50% investment-to-value figure compared total project capital with the stabilized valuation; it was not a mortgage LTV against current value.

A master lease with the former owner was designed to place subleasing responsibility with an operating tenant under Helvetica's supervision. The tenant would have a 12-month option to buy the building for $3.33 million. Option installment payments were scheduled to begin in month 6, allowing an initial leasing period. A prospective credit tenant had expressed interest in the top floor, but the summary did not confirm an executed occupancy lease.

If the option was not exercised, the plan called for the master lease to expire and Helvetica to retain the building for sale or further lease-up over a 1-to-2-year horizon. The December 2016 summary describes the structure and intended exits; it does not establish a completed acquisition, option exercise, stabilized occupancy, or realized return.

Benefit to the Owner and Operator

• A direct-acquisition structure instead of a new loan against a vacant 34,026 SF property
• A proposed master lease allowing the former owner to operate and sublease the building
• A 12-month purchase option at a stated $3.33 million price
• A $1.4 million tenant-improvement allocation to support the leasing plan

Deal Highlights

• Bank-owned, three-story office building in Billings, Montana
• 34,026 SF, originally built in 1972 with a reported $3 million renovation
• $2.95 million total planned capital, including a $1.365 million purchase budget
• Reported appraisals: $3.82 million as-is and $5.9 million stabilized
• Master lease paired with a 12-month, $3.33 million purchase option
• Alternative exit: retain ownership, lease up, and sell; no completed exit reported