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The Challenge
Risky Business.
A local real estate company acquired and held an assortment of unrelated assets in a single corporate entity. Although the assets were insured, any liability to any one asset could risk all of the assets. The assets were leveraged with a blanket loan and any changes to the legal ownership structure and setup would have required the approval of the existing lender. The company tasked Beplace with refinancing the existing debt and streamlining changes to the structure of the company to reduce the risk profile of the underlying assets.
The Solution
Finance, and Add-Ons.
Beplace set out to reorganize the portfolio in order to achieve optimal levels of risk mitigation and control, and to help prepare, approve, and close the finance transaction. Beplace analyzed factors such as location, proximity, and industry standards for operational workflows, capital improvement projects, and possible dispositions to propose a new setup. At its foundation, each property was placed into a separate entity with its own unique tax identification number, and all of the entities were now subsidiaries of subsidiaries of the original single corporate entity. The new 3-level entity structure mitigated risk between multiple operational entities, multiple layered holding companies, and one beneficial holding entity. The new business setup was submitted for approval to the company's legal team, which used the new structure within the context of the refinancing.
The Result
New Business Setup.
Beplace formed the new business entities and the company's legal team generated the necessary internal documents to reflect the layered ownership. The newly restructured operational entities subsequently closed the refinanced debt. The company was able to achieve a new business setup as part of a refinance of its existing debt. The new setup did not require the approval of any lender or any significant costs since it was included as part of the cost of the finance transaction. The additional entities allowed the properties to be operated separately, and their structure allowed the company the option to consolidate for tax purposes.
* Beplace includes agents, directors, employees, managers, owners, or other stakeholders of Beplace whether individually or through Beplace.
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