Plus: Boost in Foreign Capital Expected for NYC CRE; Digital Realty Completes $3 Bil. Global Refinancing; Starwood Property Trust and Fortress Co-Originate $285 Mil Loan; and Financing Round-Up
Oaktree Capital Management, has securitized a portfolio of non-performing loans, real-estate-owned properties, and performing loans LP it acquired from seven financial institutions for $340.8 million. The portfolio has an aggregate unpaid principal balance (UPB) of $739.8 million.
Kroll Bond Rating Agency assigned a ‘BBB- (sf)’ preliminary ratings to Class A of the ORES, Series 2013-LV2 transaction.
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ORES Series 2013-LV2 contains 831 NPLs (61.6% of the portfolio’s total acquisition basis), 244 performing loans (30.8%), and 76 REO properties (7.5%). Several of the assets are backed by more than one collateral item, and there are a total of 1,906 collateral items in the pool.
The transaction is structured as a liquidation vehicle that monetizes recoveries from the assets to pay the rated notes.
The underlying collateral is comprised of commercial and multifamily real estate properties (60.6% of acquisition basis), land (25.3%), residential assets that are primarily commercial loans (12.3%), and other collateral (2.4%). The collateral is predominantly located in the Southeastern United States.
The top-three state exposures include Georgia (22.2%), Florida (13.7%), and South Carolina (12.1%). The average balance of the assets based on acquisition basis and UPB is $296,060 and $642,704, respectively.
The transaction will be managed by Sabal Financial Group, an affiliate of Oaktree.
Boost in Foreign Capital Expected for NYC CRE
Despite a recent dip in the foreign capital infusion into the New York real estate market, interest from investors across the globe remains high and that this declining trend should turn around by the end of the year, according to Brookfield Financial, a New York based global investment banking and commercial property brokerage firm
However, based on the on-the ground feedback from the collaborative Brookfield Financial partner offices worldwide, there’s still an enthusiastic demand for New York commercial real estate
from international investors and Brookfield believes that the recent slide will change course and veer upwards during the last six months of the year.
“We are in daily contact with our global partners and their feedback suggests that the numbers do not tell the whole story. Based on first-hand conversations with the numerous foreign investors that the Brookfield offices have direct access to, overseas demand for Manhattan real estate remains as strong as ever, especially from Canadian pension funds, Asian institutions, and Brazilian high net worth individuals,” said Eric Anton, managing partner of Brookfield Financial. “It’s clear to us that investors abroad still see the value of Manhattan real estate and remain particularly enamored with the office and retail sectors. By the end of the year, we are forecasting that this downward trend will begin to reverse itself and foreign investment numbers will uptick.”
Mr. Anton added, “The one sector that we do expect to remain temporarily stalled is foreign investment in New York residential assets. Our feedback indicates that international investors are still somewhat hesitant towards making a commitment in the residential sector and we expect that trend to continue for the time being.”
Digital Realty Completes $3 Bil. Global Refinancing
Digital Realty Trust Inc. completed the refinancing of its global revolving credit facility and term loan. The combined facilities total $3 billion represents the fifth largest unsecured credit facilities among U.S. REITs.
The refinancing provides funds for acquisitions, development, redevelopment, debt repayment, working capital and global expansion.
The refinancing allowed the company to reduce pricing, extend loan maturities and increase its aggregate commitments by $450 million.
“We are very pleased with the strong demand we received from the international lending community to participate in the refinancing of these facilities, which were oversubscribed with commitments totaling $4.6 billion from 27 financial institutions from around the globe,” said A. William Stein, CFO and CIO of Digital Realty. “To satisfy this demand, we upsized our global revolving credit facility by $200 million and increased our term loan by $250 million.”
“In addition, the improved pricing grid is equal to or better than any widely syndicated credit facility for a U.S. large cap investment grade REIT, including those with a credit rating higher than DLR’s BBB/Baa2 rating,” Stein added. “We believe these positive trends illustrate the institutional lender community’s view on the strength of our balance sheet and underlying business, while providing us with greater financial flexibility as we continue to expand our portfolio globally.”
The $2 billion global revolving credit facility matures in November 2017, has two six-month extension options, and can be increased up to a total of $2.55 billion U.S. dollar equivalent. Pricing for the facility, based on the company’s senior unsecured debt rating of BBB/Baa2, was reduced from 125 to 110 basis points over the applicable index for floating rate advances and the annual facility fee was reduced from 25 to 20 basis points.
The $1 billion multi-currency term loan maturity is unchanged and remains April 2017, with two six-month extension options added, and total commitments can be increased up to $1.1 billion. Pricing for the term loan, based on the company’s senior unsecured debt rating of BBB/Baa2, was reduced from 145 to 120 basis points.
Funds from the combined facilities may be drawn in U.S, Canadian, Singapore, Australian and Hong Kong dollars, as well as Euro, pound sterling, Swiss franc, Mexican pesos and Japanese yen denominations.
Starwood Property Trust and Fortress Co-Originate $285 Mil Loan
Starwood Property Trust with an affiliate of Fortress Investment Group LLC originated a $285 million loan on a portfolio of 123 Red Roof Inn hotels totaling 14,585 rooms in 29 states.
The loan is sponsored by a joint venture between Five Mile Capital Partners LLC and Westmont Hospitality Group.
The loan upsizes and extends a $275 million debt package Fortress provided to the sponsors in August of 2011 to acquire the portfolio. Starwood purchased the $185 million A-note on the initial loan.
The current Loan is a 50%-50% pari-passu structure, with both lenders sharing economics through the last dollar of debt. The sponsors plan to use the capital to continue to upgrade the properties.
Starwood and Fortress affiliates securitized a $200 million senior A-note to increase their investment returns and retained equal portions of the loan’s related B-Note.
Capital Markets Report
Crescent Capital Group
LP closed Crescent Mezzanine Partners VI. Investors committed more than $3.4 billion to Fund VI, meaningfully exceeding the initial fundraising target of $2.5 billion and representing the largest private mezzanine offering in Crescent Mezzanine’s history.
KTR Capital Partners
closed its third fund, KTR Industrial Fund III LP, which launched in the second quarter of 2012, raised $1.2 billion of investor capital and exceeded its target fundraising goal of $750 million. Investors in the fund include public and corporate pension funds, foundations, endowments and other institutional investors. KTR III will continue its predecessors’ strategy of acquiring, developing and operating industrial properties throughout major population centers and key logistics hubs across North America. KTR III will invest in single property and portfolio acquisitions as well as development on both a build-to-suit and speculative basis. To date, 30% of KTR III has been committed.
closed its third value-add real estate fund. RCG Ventures Fund III (d/b/a RCG Ventures Value-Add Real Estate Fund III) exceeded its $75 million target with a total capital raise in excess of $107 million. Fund III was significantly oversubscribed and achieved these commitments within 90 days of its launch. Fund III, similar to RCG's previous two funds, will invest in value-add shopping centers throughout the U.S. The investor base consists of high net worth individuals and family offices.
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Hilco Real Estate: Bank Owned Sale of 132,236-SF Manufacturing Facility.