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Capital Markets Report: MetLife’s CRE Lending Tops $11 Billion in 2013

Plus CRE Funding News from Avenida Capital, Griffin Capital, Madison Realty Capital, Medical Properties Trust, Northwestern Mutual, State Farm and others
March 17, 2014
MetLife said its MetLife Real Estate Investors unit originated $11.5 billion in commercial real estate loans in 2013, according to Robert Merck, senior managing director and global head of real estate investment for MetLife.

The real estate financing unit, which reorganized in late 2012 to include an asset management capability for institutional investors, also secured more than $7 billion in commitments from institutional investors.

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The company agreed to invest nearly $3 billion in its equity real estate portfolio, including deals with several new joint venture partners in 2013. MetLife’s authorized investment in such properties was $1.9 billion, with the balance provided by other investors. The firm believes its commercial mortgage lending and equity real estate deals provide investment opportunities that match the long-term liabilities the company writes through its insurance products.

Within its international portfolio, MetLife also successfully grew its lending activities in 2013, originating $1.2 billion in the United Kingdom, $500 million in Mexico, $400 million in Japan, and $225 million in Chile.

Strong Commercial Mortgage Lending

Some of Metlife's more noteworthy transactions in 2013 included:
• $500 million participation in a $1 billion first mortgage on 1095 Avenue of the Americas, a Class A office building in midtown Manhattan that serves as MetLife’s headquarters.
• $450 million loan on The Shops at Columbus Circle, a high-end retail center located in the Time Warner Center at Columbus Circle in Manhattan.
• $360 million first mortgage on The Americana at Brand, a super-regional shopping center in Los Angeles County.
• $235 million first mortgage on BG Group Place, a Class A office tower in Houston.
• $150 million loan on The Mall at Green Hills, a top-quality regional mall located in Nashville. And
• $100 million first mortgage on Mosaic Apartments, a 386-unit, Class A multifamily project in San Jose.

Asset Management

MetLife’s asset management business secured more than $7 billion in investor commitments in real estate and mortgage loans from partners such as Norges Bank and Sun Trust Bank.

"Our asset management business really hit its stride in 2013,” Merck said. “We believe this is a clear sign our clients are relying on our extensive experience in real estate investing to create opportunities for attractive, long-term returns."

Equity Real Estate Investments

MetLife’s $13.6 billion equity real estate portfolio includes investments in office, apartment, retail, industrial and hotel properties. It has origination and asset management offices located in seven regional offices in the United States, as well as London, Mexico City, Tokyo and Santiago, Chile.

MetLife agreed to acquire real estate and real estate joint ventures with property values of $2.9 billion during calendar year 2013. Some of its more noteworthy equity real estate transactions in 2013 included:
• 555 12th Street, a 755,000-square-foot office building in Washington, DC. And
• The Terraces, a 1.07 million-square-foot office building in Atlanta PNC Center, a 617,000-square-foot office building in Chicago Ritz Carlton San Francisco, a 336-room hotel in San Francisco Mosaic Apartments, a 210-unit apartment complex in Tampa, Fla.

Funding Round-Up

Avenida Capital LLC, a Latin American real estate investment firm with offices in Bogota and New York, completed its inaugural fundraising effort for its Avenida Colombia Real Estate Fund I LLC. A total of $140 million was raised from pension funds, foundations and institutions in the United States, Canada, Europe and Latin America, with the fund closing above its initial target amount. The fund primarily invests in the development of retail and residential projects across Colombia.

Griffin Capital filed registration papers for a public offering for a new REIT named Griffin Capital Essential Asset REIT II Inc. It is looking to raise $1 billion of which it would use a substantial amount of the net proceeds to acquire single tenant business essential properties.

Madison Realty Capital closed a distressed debt transaction that will result in the sale and completion of the previously stalled 84-unit condominium conversion project at 45 John St. in Lower Manhattan. Winning out in a competitive bid situation, MRC first acquired the defaulted first mortgage in foreclosure on 45 John Street for $47 million. Then, after resolving $7 million of non-bank liens to address title issues and further negotiating the delivery of a deed for the property from the defaulted borrower, MRC accepted an unsolicited offer of $60 million from a new sponsor, and provided $45 million of financing for the new sponsor’s acquisition of the project.

Medical Properties Trust Inc. raised approximately $113 million from the sale of stock to be in part to fund one or more acquisition and development transactions relating to acute care hospital facilities in the United States, with an aggregate investment value of up to $500 million. The company is currently in advanced negotiations for these potential transactions and expects to consummate all or some of them during the first half of 2014, and some as soon as during the first quarter of 2014.

Northwestern Mutual funded a $140 million mortgage loan for Levi Plaza, a multi-building office campus which serves as the global headquarters for Levi Strauss & Co. Northwestern Mutual provided the loan to a group of investors majority owned and controlled by Gerson Bakar, Diane B. Wilsey and Interland. The campus, developed in the early 1980s, is on just nine acres in the North Waterfront neighborhood in San Francisco.

The San Diego City Employees’ Retirement System approved a $50 million commitment to Carlyle Realty Partners VII and a $20 million commitment to the CBRE Strategic Partners US Value 7 Fund. Carlyle Realty Partners VII is a closed end, opportunity fund focused on a broad range of U.S. real estate investments. Carlyle typically focuses on single-assets, rather than portfolios of assets, and equity investments of less than $50 million. CBRE Strategic Partners US Value 7 is a non-core, diversified fund. The fund will focus on the conversion of undermanaged or distressed assets to core assets and sell them.

State Farm Mutual Automobile Insurance Co. reported surplus funds attributed to sale leaseback transactions last year increased by $322.2 million as the company recorded 29 such transactions. The insurance company reported pre-tax gains on the sales of $521 million.

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