$19.7MM Northern California Self-Storage Loan: Early Sale to Avoid Default and Preserve Yield

A $19.7 million self-storage construction loan in Northern California was successfully resolved through a proactive loan sale ahead of maturity default. The property—a newly built, Class A storage facility with 47,000 SF of rentable area and additional wine-storage and office space—had recently completed expansion and was in early lease-up.

As market conditions shifted and permanent financing options tightened, early financial reviews and sponsor communications indicated a low probability of refinancing. Recognizing the growing risk, the situation was reassessed months before maturity. Updated valuation and performance analysis confirmed that, while the property’s fundamentals were improving, the borrower’s balance sheet and liquidity would not support a takeout loan.

By anticipating these issues well in advance, the lender was able to pursue a strategic loan sale to an active storage investor. The sale closed one month before maturity at par, delivering immediate liquidity and preserving the lender’s underwritten yield.

This outcome underscores the value of foresight, early data-driven decision-making, and empathetic borrower analysis—identifying the inflection point where proactive action prevents default and protects returns.