Real Money: CBRE Lines Up ING Financing

CB Richard Ellis Group Inc. has raised $800 million of new term loans under its credit agreement to finance the acquisition of the real estate investment management businesses it is acquiring from Netherlands-based ING Group NV.

As previously reported, CBRE entered into definitive agreements to acquire substantially all of the ING Real Estate Investment Management (ING REIM) operations in Europe and Asia, as well as Clarion Real Estate Securities (CRES), its U.S.-based global real estate listed securities business, for $940 million in cash as well as co-investment interests in certain funds managed by ING REIM.

CBRE received commitments from lenders to fund $400 million of delayed-draw, 7-year senior secured term loans under a new Tranche C Facility and $400 million of delayed-draw, 8.5-year senior secured term loans under a new Tranche D Facility. The interest rate for the Tranche C loan is 325 basis points over LIBOR or approximately 3.5% (with 30-day LIBOR at approximately 0.25%); while the interest rate for the Tranche D loan is 350 basis points over LIBOR or approximately 3.75% currently. Both tranches are subject to a 0.50% upfront fee and neither tranche carries a LIBOR floor.

Following the completion of the acquisitions, CB Richard Ellis' net debt is expected to be less than 2.25x EBITDA, as calculated under its secured credit facility, well within its 3.75x maximum allowable covenant leverage ratio.

"We are very pleased that our financing for the ING REIM acquisition is now in place and that we continue to have substantial flexibility and capacity to take advantage of other opportunities in a recovering commercial real estate market," said Brett White, CEO of CB Richard Ellis.

As of Dec. 31, 2010, the assets under management1 in the ING REIM portfolio CB Richard Ellis is acquiring totaled approximately $59.8 billion. CBRE Investors' assets under management1 totaled $37.6 billion at that time.

The financing was led by Credit Suisse AG and Merrill Lynch, Pierce, Fenner & Smith Inc. The Royal Bank of Scotland, HSBC Bank USA, Wells Fargo Bank and Barclays Bank are also participating lenders.

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Goldman Sachs Going to Market with a New CMBS Deal

Goldman Sachs is expected to go to market next week with a new $435 million commercial mortgage-backed securities (CMBS) offering.

GS Mortgage Securities Corporation Trust, Commercial Mortgage Pass-Through Certificates, Series 2011-ALF is backed by 29 senior living facilities sponsored by CNL Lifestyle Properties and Sunrise Senior Living.

The transaction represents a securitization of the beneficial interest in a three-year loan, cross-collateralized by a portfolio of 2,082 assisted living and independent living units. The properties are generally located around major combined statistical areas, with the largest concentrations in New York (34.5% of portfolio by unit) and Chicago (16.2%).

Proceeds from the notes, together with additional equity, were used by the sponsors, Sunrise Senior Living and CNL Income Partners to acquire the 29 properties from a joint venture between Sunrise and Arcapita Inc.

Of the 29 properties, 25 were developed by Sunrise in its "Victorian mansion" format. The average facility age across the portfolio is 10 years.

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Capital Raisings, Note Purchases and Property Financings

Berkadia Commercial Mortgage

originated $15.05 million in floating-rate debt through its Freddie Mac program for the refinance of Regency Place, a multifamily property in Wilmington, MA. The 70% LTV loan features a 5-year adjustable-rate mortgage of 3.26% with a lifetime cap of 5.85% with a 30-year amortization. Located on approximately 11 acres at 128 West Road, Regency Place is a 120-unit luxury apartment complex housed in five, three-story buildings built in 2008.

Chesapeake Lodging Trust

completed its public offering of 12.5 million common shares, raising approximately $212.2 million of net proceeds. The company intends to use the net proceeds to repay debt under its revolving credit facility, for hotel investments and for general business purposes.

Developers Diversified Realty Corp.

plans to sell 9.5 million common shares in a public offering. At its current trading price of $14.05/share, the sale could result in proceeds of about $133.5 million. The company anticipates using the net proceeds to redeem $180 million of its 8% Class G Preferred Shares. Separately, DDR priced $300 million of senior unsecured notes in an underwritten public offering. Net proceeds are expected to be approximately $295.5 million, which the company intends to use to repay short-term higher cost mortgage debt and to reduce balances on its revolving credit facilities and secured term loan.

Digital Realty Trust Inc.

priced an underwritten registered public offering of $400 million aggregate principal amount of 5.250% notes due 2021. The operating partnership intends to use the net proceeds to temporarily repay borrowings under its revolving credit facility, to acquire additional properties, to fund development and redevelopment opportunities and for general working capital purposes, including potentially for the repurchase, redemption or retirement of outstanding debt securities.

Douglas Emmett Inc.

obtained a 7-year secured, non-recourse $350 million term loan. This loan has a maturity date of March 1, 2020, including two one-year extension options. The loan bears interest at a fixed interest rate of 4.46% until March 1, 2018, and a floating interest rate thereafter. Monthly loan payments are interest-only for the first three years with principal amortization thereafter based upon a 30-year amortization schedule. The loan proceeds were used to repay a $319.6 million term loan, which is one of the seven term loans aggregating $2.3 billion that mature on August 31, 2012. The balance of the loan proceeds will be retained for other corporate purposes.

DuPont Fabros Technology Inc.

priced an underwritten public offering, 3.6 million shares of its 7.625% Series B Cumulative Redeemable Perpetual Preferred Stock, looking to raise $90 million. The company intends to use all of the net proceeds to develop the second phase of its CH1 data center in Elk Grove Village, IL. The company estimates that it currently needs $170 million to complete the development of the second phase of its CH1 data center.

Dynex Capital Inc.

priced a public offering of 8 million shares of its common stock at $10.35 per share for total gross proceeds of $82.8 million. The company intends to use the net proceeds to acquire additional investments.

First Industrial Realty Trust Inc.

priced its underwritten public offering of 8.9 million common stock at $11.40/each. First Industrial will receive approximately $100 million of net proceeds from the offering, which it intends to use the proceeds for general corporate purposes, which may include repayments or repurchases of debt.

Health Care REIT Inc.

raised more than $2 billion through the sale of 25 million shares of its common stock and 6.5% cumulative convertible perpetual preferred stock. The company intends to use the net proceeds from these offerings to finance a portion of the purchase price of its previously announced acquisition of substantially all of the real estate assets of privately-owned Genesis HealthCare Corp. for a purchase price of $2.4 billion.

Jefferies Group Inc., the Government of Singapore Investment Corp. and LoanCore LLC

, led by Mark Finerman, have formed Jefferies LoanCore LLC, a new joint venture commercial real estate finance company with $600 million in initial equity commitments. Jefferies LoanCore will originate commercial real estate debt through a team of professionals led by Finerman.

Madison International Realty

closed its latest fund, Madison International Real Estate Liquidity Fund IV, LP (MIRELF IV), with $510 million of equity commitments. Madison International Realty is a real estate private equity firm that acquires illiquid and/or partial ownership interests, such as joint venture, limited partner and co-investment interests in Class A properties and portfolios from investors seeking an early exit strategy. The firm also provides equity for recapitalizations, debt restructurings, and to monetize embedded equity in existing ownership entities. Madison invests as a principal on behalf of its private equity funds. The fund exceeded its $400 million target with its final closing of $510 million. MIRELF IV investments include the Chrysler East Building at 666 Third Avenue in New York. Madison acquired additional partnership interests in the trophy Manhattan office tower, increasing its stake in the property to 48.9% from 38.5%. Other Madison portfolio investments include 300 Park Avenue and 520 Madison Avenue in New York City; One Bush Street, San Francisco; and the Devonshire House, London.

Nearon Enterprises

secured a $9.99 million refinancing for 940 Remillard Court, a 166,600-square-foot, fully-leased industrial/warehouse facility in San Jose, CA. HFF placed the 5.98% fixed-rate loan with Wells Fargo Bank. The loan has a 10-year term and 30-year amortization schedule. Loan proceeds are retiring a maturing loan on the property. Situated on 7.6 acres, the property was originally built in 1976, the property was fully renovated in 2000 and 2008, and is 100% occupied by tenants including Air Systems Inc. and Legacy Transportation Services.

NorthStar Realty Finance Corp.

priced a private offering of $150 million aggregate principal amount of the operating partnership's 7.5% exchangeable senior notes due 2031, which represents an upsizing of $50 million from a previously announced amount. The operating partnership has granted to the initial purchasers of the Notes a 30-day option to purchase up to an additional $22.5 million aggregate principal amount to cover over-allotments. NorthStar expects to use the net proceeds to purchase or repay its indebtedness and for general corporate purposes.

The Federated Cos.

acquired a mortgage from KeyBank that is secured by Bayside Village in Portland, ME. The asset is in downtown Portland between the Old Port and Back Cove on 132 Marginal Way and consists of 100 units and 400 bedrooms and operates as a student housing complex that was completed in 2008. The Federated Cos. leveraged the bank's desire to reduce its exposure to defaulted notes before year-end 2010. It paid $23,000 per bed and 30 cents on the dollar of total project costs. The Federated Cos. was able to navigate and negotiate successfully with the defaulted borrower and the mezzanine lender who held a second mortgage on Bayside Village to relinquish any rights to the asset and received a deed in lieu at closing.

Thomas D. Wood and Co.

secured $7.4 million of financing for Dollar General Kissimmee and Bonita Exchange Land. Dollar General received $1.3 million it needed for a construction loan for a build-to-suit single-tenant retail facility. The loan-to-value is 75% and loan-to-cost is 80%. The 9,100-square-foot retail building will be constructed on 1.4 acres at 2220 Michigan Ave. in Kissimmee, FL. Bonita Exchange received a $6.1 million bridge loan to refinance existing debt. Bonita Exchange is 23.1 acres of commercial land at the southwest quadrant of I-75 and Bonita Beach Road in Bonita Springs, FL.

Vornado Realty Trust

closed $250 million of additional commitments to its real estate investment fund, Vornado Capital Partners, bringing the total to $800 million. Vornado has committed $200 million of the $800 million and serves as the general partner and investment manager. The fund is Vornado's exclusive investment vehicle for real estate and real estate-related investments that fit within the fund's investment parameters during its three-year investment period.

Wilshire Capital Investments

acquired from Archon Group, $100 million worth of mezzanine debt secured by Class A office buildings in Los Angeles, San Francisco and Boston. 1000 Wilshire is a 471,000-square-foot office building in downtown Los Angeles' Financial District. The 22-story postmodern building, characterized by its distinctive "spade shape," oversized windows and marble façade, is 75% leased. 100 California St. is a 15-story, 288,000-square-foot building in the heart of San Francisco's North Financial District. 116 Huntington Avenue is a 15-story, 263,000-square-foot office building in Boston's Back Bay.

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