$1.17M Purchase Bridge: Single-Tenant Office Building Bought Below Replacement Cost
Kalamazoo, MI — A seasoned investment group found a well-built, institutionally managed office building priced well below replacement cost, but the single credit tenant had under a year left on its lease and had already given notice it would vacate. With near-term income about to disappear, bank debt was unavailable on the purchase timeline. Helvetica funded a $1,172,000 first mortgage and closed quickly, letting the buyers capture the basis and re-tenant the asset on their own schedule.
The Borrower's Problem
The sponsors are experienced commercial investors with a long record of buying and repositioning value-add assets. They identified an office building in the Kalamazoo market trading at a basis well under replacement cost — a quality structure, roughly 15 years old, 100% occupied by a credit-worthy tenant and institutionally managed since it was built.
The catch was the rent roll's expiration date. The lease had less than twelve months remaining and the tenant had signaled it would vacate at expiration, leaving the building fully vacant. Bank underwriting keys off durable in-place cash flow, so lenders scored the deal as insufficient debt service coverage and an unstabilized asset. Conventional financing was unavailable, and the acquisition had a closing deadline that would not wait for a workaround.
The Helvetica Solution
Helvetica underwrote the real collateral story: a low purchase basis relative to replacement cost, a functional and well-maintained building, and sponsors with a demonstrated history of leasing up exactly this kind of asset. A $1,172,000 first mortgage at 70% of value funded the purchase on a 24-month term — long enough to absorb the tenant's departure, complete re-tenanting, and stabilize income.
Common-sense underwriting replaced a DSCR test the property could not pass in the near term, and the loan closed quickly so the buyers kept the below-market basis that made the deal worth doing.
Benefit to the Borrower
- Acquired the building at a basis well below replacement cost
- Closed fast, on the purchase agreement's timeline, after a bank turndown
- Financed an asset facing known near-term vacancy that banks would not underwrite
- 24 months of runway to re-tenant and stabilize before permanent financing
- Preserved capital for leasing costs and tenant improvements
- Kept the full lease-up upside with the sponsorship, not a joint-venture partner
Deal Highlights
- $1,172,000 first mortgage, 70% LTV, 24-month term
- Single-tenant suburban office building, ~15 years old at closing
- 100% occupied at funding by a credit-worthy tenant with a near-term expiration
- Purchase loan on an unstabilized asset with insufficient forward DSCR
- Institutionally managed since original construction
- Exit: re-tenant and stabilize, then sell or refinance into permanent debt
Buying an asset the bank calls unstabilized?
Helvetica funds purchase and bridge loans from $300K–$10M+ on investment and business-purpose real estate, typically closing in 3–10 days following receipt of all requested documentation.
