Note Purchase LOans

There are few lenders willing to finance note purchases due to the complicated nature of distressed debt situations as well as the fact that such financing is not secured by a direct first mortgage. There are even fewer funding sources that have significant experience in this realm.

A10 Capital’s deep experience in dealing with a variety of distressed debt transactions dating back to the late 1980s and Resolution Trust Corporation (RTC) fills the void for note purchase transactions. A10 Capital provides flexible and timely financing to small and medium sized investors acquiring distressed debt secured by commercial real estate. Once the foreclosure occurs, our note purchase loans automatically convert to a value-add / mini-perm loan to provide the necessary time to stabilize the property.

A10 Capital makes note purchase loans in amounts from $500,000 to $10 million per asset. All note purchase loans are kept on our balance sheet and serviced in-house.

TYPICAL DISTRESSED DEBT SITUATIONS

  • Single loan purchases
  • Small loan pool purchases
  • Buy – Liquidate: Transactions in which the distressed debt buyer looks to quickly foreclose, then sell the underlying commercial property
  • Buy – Hold: Transactions in which the distressed debt buyer looks to quickly foreclose, then own and operate the underlying commercial property

Note Purchase Loan Terms

  • Advance rate: Up to 65% of the loan acquisition cost
  • Financing amount: $500,000 to $10 million per loan
  • Future Funding: For lease-up costs and earn-outs
  • Pricing: Rates and fees adjusted for risk and leverage
  • Term: 1-5 years (preferred term is 2-3 years)
  • Eligible loan types: Typically secured office, industrial, multi-family, and retail properties
  • Recourse: Typically non-recourse with standard carve-outs
  • Timing: A10 Capital usually works with its clients during the loan sale process to ensure there is sufficient time to close once an agreement to buy the debt has been reached

BENEFITS OF A10 Capital'S DISTRESSED DEBT FINANCING

  • Non-recourse
  • Faster than a conventional lender
  • Highly experienced team to assist in closing complicated distressed debt transactions
  • Focus on single loan and small loan pool purchases
  • A10 Capital's distressed debt financing provides capital to acquire more debt assets and leverage returns
  • Upon foreclosure, a note purchase loan automatically converts to a value-add / mini-perm loan to provide the necessary time to stabilize the property