Credit Evaluation School Instructor eBook - Oct 2023

People: Purpose:

Borrower(s) – JTK 248, LLC. Guarantor(s) – Oppi, Inc., Oppi Investment Co., and Joseph H. Purchase a participation to provide construction/mini ‐ perm financing for 42 market rent apartments. I/O for six month construction term, monthly P&I for the 54 month mini ‐ perm based on a 10 year amortization, balloon at maturity. Loan modified to increase interest rate and extend maturity 48 months. Payment will remain same and will result in the loan being paid in full at maturity.

Payment:

Protection:

First lien DOT, Assignment of Leases/Rent, excess ground for phases 2 & 3.

Problem:

A downturn in oil prices has resulted in the project not reaching proforma rents or occupancy levels.

Rent roll indicates 92% of units are leased. Actual rents are 62% BELOW Proforma rents The loan was modified due to rents and occupancy being below projections.

Guarantor agreed to increase the monthly payment, make quarterly $100,000 principal curtailments, provide additional collateral of $1,000,000, and Assignment of Sales Proceeds on another property $1,000,000 less any quarterly curtailments. Guarantor paid down the loan by $1 million, pledged additional collateral to cover the shortfall in NOI due to reduced market rents. LTV is at 71% and note is on a fully amortizing basis now

Prospects: