Gastro-Lounge Owners of DRAKE Acquire New San Francisco Location for $4.3 million
June 17th, 2014
As published in The Registry
TMC Financing announced that the owners of DRAKE Gastro Lounge have acquired their building located in the South of Market area (SOMA) of San Francisco with a 20-year fixed-rate, SBA 504 loan for $4.3 million. The two-story restaurant, bar, and lounge occupies a 9,900 square foot building located at 508 Fourth Street in San Francisco. The financing enabled the minority owned and operated business to hire new employees and retain working capital through a low down-payment.
TMC Financing provides SBA 504 financing for restaurant & lounge acquisition
“At TMC, we love helping up and coming restaurateurs,” said Barbara Morrison, President and CEO at TMC Financing. “While many conventional lenders shy away from financing restaurants, the SBA 504 program is able to provide low, fixed rate financing with as little as 10% down. This makes financing through the SBA a great strategy for restaurateurs looking to retain working capital.”
The San Francisco rental market is becoming increasingly competitive with rates soaring to record highs. With rental prices sky rocketing, many business owners are capitalizing on the advantages of owning the property, rather than leasing. In just the last three years, rental rates have increased 75%. By owning the property, business owners can manage large expenses like labor and occupancy. DRAKE was able to recoup more than $2,000 a month by purchasing their location, as well as fixing their operating expenses against future lease rate inflation.
“TMC seamlessly guided us through the process of purchasing our business’s underlying real estate. By utilizing the SBA 504 loan program, our monthly real estate expenditures were fixed and reduced,” said Kingston Wu, co-owner of DRAKE and Principal at Brixton Restaurant. “As investors, purchasing this real estate diversifies our investments and reduces our risks.”
Bruce Whitaker, Senior Vice President of Business Development at TMC Financing, worked with the owners of DRAKE Gastro Lounge to provide financing through the SBA 504 commercial real estate loan program. The participating third party lender on the project was Stanford Federal Credit Union in Palo Alto.
DRAKE is a Vegas-inspired gastro-lounge which provides customers an upscale cocktail and lounge environment. The two-story South of Market bar, lounge, and special event space boasts beautiful full-service bars on each floor, ornate chandeliers, plush seating, and two full service kitchens. The space is anchored by a two story chandelier centerpiece which rests above the first floor bar and a unique pink glass chandelier at its entranceway. DRAKE is a popular special event space for Moscone Center attendees as well as local businesses and non-for-profits.
About the SBA 504 Program
The SBA 504 Program offers businesses below-market, fixed rate financing for the acquisition, renovation or construction of commercial real estate. SBA 504 loans provide long-term stability for businesses with the ability to retain working capital which can be used to further grow the business and create new jobs. The June SBA 504 interest rate is 5.06% fully fixed for 20 years. The typical loan structure for an SBA 504 loan comes from a first mortgage with a conventional lender and a second mortgage from a certified development company (CDC).
TMC Financing provides Small Business Administration (SBA) 504 real estate financing and is the leading Certified Development Company (CDC) in Northern California and Southern Nevada. In the past 30 years, TMC has provided over $7.5 billion in SBA 504 financing for more than 4,500 businesses. This financing has resulted in the creation of over 33,000 jobs. TMC has been ranked in the top five Certified Development Companies nationwide for over a decade. For more information, visit tmcfinancing.com.