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Real Money: Investors Raised $3.85 Bil. Last Month for Real Estate Acquisitions

Also This Week: Chase Purchases $3.5 Billion of Performing Multifamily and CRE Loans from Citibank; and Property Financings
August 11, 2010
Real estate companies and funds reported raising $3.85 billion in July for real estate-related acquisitions. Almost half of the total raised ($1.85 billion) was by commercial real estate-related firms and funds, while pooled investment funds including private equity and hedge funds raised $1.8 billion, according to data compiled by CoStar Group.

Vornado Realty Trust in Paramus, NJ, reported raising the largest amount during the month. The fully integrated equity real estate investment trust announced that it completed the first closing of its real estate investment fund with initial equity commitments of $550 million (including $200 million from Vornado). Vornado said it expects to raise total commitments of $1 billion. The fund is Vornado’s exclusive investment vehicle for all real estate and real estate-related investments over the next three years.

Cedar Fair Entertainment Co., a theme parks operator in Sandusky, OH, completed the issuance of $405 million aggregate principal amount senior unsecured notes. Concurrently with the closing, Cedar Fair entered into a new $1.175 million senior secured term loan facility and a new $260 million senior secured revolving credit facility. Cedar Fair used the net proceeds to repay outstanding debt under its previous credit facilities.

Teachers Insurance and Annuity Association, College Retirement Equities Fund (TIAA-CREF) reported raising $396 million in the past year for its TIAA-CREF Asset Management Core Property Fund.

10 Largest Amounts Reported Raised in July
  • Sponsor Amount

  • Vornado Realty Trust $550,000,000

  • Cedar Fair Entertainment Co. $405,000,000

  • TIAA-CREF $396,249,116

  • Brookfield Asset Management $315,000,000

  • Invesco Realty $289,600,000

  • Douglas Emmett $249,250,000

  • Madison International Realty $187,575,000

  • Prosperitas Investimentos S.A. $165,000,000

  • Green Courte Partners $119,625,000

  • Garrison Investment Management $103,000,000

On a monthly basis, the group having the most fund-raising success was a Brazilian fund raising money in the United States for commercial property investments in Brazil. Prosperitas Investimentos S.A. raised $165 million between the end of June and mid July.

Cole Real Estate Investments also continued to raise approximately $100 million per month through its ongoing offering for shares in Cole Credit Property Trust III Inc. Last month, Cole Credit Property Trust III also completed the $310 million purchase the 583,000-square-foot City Center at 555 110th St. in Bellevue, WA. The building is 99.6% occupied, of which approximately 96.3% is subject to a net lease with Microsoft Corp. that expires in June 2024.

Apple REIT Nine in Richmond, VA, netted raising almost $69 million between mid June and mid July. The hotel REIT, had acquired 11 hotels through the first six months of 2010. Its largest purchase came in January when it purchased a newly constructed Marriott hotel in Houston with 206 rooms for $50.75 million.

Most Money Reported Raised on a Per Month Basis in July
  • Sponsor Amount

  • Prosperitas Investimentos S.A. $165,000,000

  • Cole Credit Property Trust $100,000,000

  • Apple REIT Nine Inc. $68,947,933

  • Ohio Equity Fund Inc. $57,000,000

  • Hines $45,900,000

  • American Realty Capital Partners $45,700,000

  • TIAA-CREF $33,020,760

  • Angelo, Gordon & Co. $30,116,667

  • Inland Real Estate Investment Corp. $20,732,513

  • Invesco Realty $12,591,304

Chase Purchases $3.5 Billion of Performing Multifamily and CRE Loans from Citibank

JPMorgan Chase has purchased a $3.5 billion portfolio of multifamily and commercial real estate loans from Citibank. Terms were not disclosed.

The portfolio, which includes approximately 3,800 loans, is primarily multifamily real estate loans for properties in California, New York and Illinois. The purchased loan portfolio contains only performing loans on properties that have shown strong credit performance, according to the buyer.

Chase’s Commercial Term Lending business is part of Chase Commercial Banking and specializes in providing loans for moderately priced apartment buildings in stable markets. About 80% of Commercial Term Lending’s existing $36 billion portfolio is multifamily loans.

“This highly desirable loan portfolio adds strong earning assets in markets we currently serve and valuable relationships that will provide new origination opportunities,” said Al Brooks, head of Commercial Term Lending.

The transaction will reduce GAAP assets by $3.5 billion in Citi Holdings, Citigroup’s portfolio of non-core operating businesses and assets. Citi has been attempting to reduce assets in Citi Holdings. As of the end of the second quarter, Citi Holdings assets were less than 25% of Citi’s total balance sheet. Citi said it will continue to pursue divestiture opportunities.

Property Financings

Cole Credit Property Trust III, through Cole MT Bellevue WA LLC, entered into a mortgage loan agreement with Wells Fargo Bank as lender, administrative agent, sole book runner and lead arranger in the principal amount of $156 million. The loan is secured by an approximately 583,000-square-foot office building, constructed in 2008 in Bellevue, WA, which is 99.6% occupied, of which approximately 96.3% is subject to a net lease with Microsoft Corp. that expires in June 2024. CCPT III OP executed a swap agreement, which fixed the interest rate at 3.99% per annum through the maturity date of the loan, Aug. 5, 2015. The loan is an interest-only loan.

Berkadia Commercial Mortgage originated $10.6 million in permanent, fixed-rate first mortgage financing through the Freddie Mac Capital Markets Execution (CME) program for Summerchase at Riverchase Apartments. The property is owned by an affiliate of Birmingham, AL- based Engel Realty Company Inc. The 75% LTV loan, which refinanced an existing Freddie Mac loan, has a 10-year term and a 30-year amortization schedule. The all-in interest rate was 4.96% for the term of the loan. Summerchase at Riverchase at 100 Summerchase Drive is a 240-unit, Class-A garden apartment community.

CB Richard Ellis Capital Markets Group arranged financing for multiple properties in several markets.
* Acquisition financing was arranged for two apartment properties in Orlando, FL. The transactions represented two separate 10-year loans totaling approximately $13.35 million. Waterways and Silver Oaks, 320-unit and 360-unit communities in Orlando, FL, respectively. The transactions were financed via Freddie Mac's Capital Markets Execution (CME) Program at approximately 80% of total cost including portions planned upgrades and renovations. The loans were each based on a 30-year amortization and were rate locked in the low 5% range.
* Refinancing was arranged for Park Place Apartments in Tampa, FL on behalf of NPV Realty Corp. in the amount of $4.7 million via Freddie Mac's CME program. Park Place Apartments is a 120-unit apartment community in Orlando. Terms of financing included a 1O-year loan term, 30-year amortization, 75% LTV, debt service ratio of 1.47x and a rate in the low 5% range.
* Refinancing for two apartment properties on behalf of SMG Property Management Inc. based in Lakewood Ranch, FL. The properties, Greenland Village Apartments in Lancaster, PA, and Royal Glen Apartments in Comstock Park, MI, represent two separate loans totaling $13.2 million. Greenland Village is a 180-unit two-story garden-style property in above-average condition consisting of 19 buildings on 15.7 acres. Financing for Greenland Village was provided via Freddie Mac's CME and consists of a 7-year fixed rate in the low 5% range, 73% LT'I, and a debt service ratio of 1.53x. Royal Glen, a single-story well stabilized garden complex in good condition was closed as part of Freddie Mac's portfolio execution.

Perry Ellis International Inc. completed the refinancing of its Miami, FL, headquarters facility as well as secured a fixed interest rate reduction on the mortgage of its Tampa, FL, distribution facility. The refinancing secures a $13 million mortgage on the Miami facility and results in additional gross proceeds of approximately $2.1 million. The terms are secured for 10 years with a fixed interest rate of 5.8%, which replaces the previous rate of 7.12%, and has a maturity of August 2020. For the Tampa distribution facility, a new rate of 5.75%, which represents a 50 basis point interest rate reduction, was secured for the remainder of the term loan, which matures in June 2016. These reductions represent an annual interest savings of approximately $215,000.

Arbor Commercial Funding funded the following deals.
* A $6 million loan under the Fannie Mae DUS Coop product line for the 300-unit complex known as Three Fountains West Cooperative in Indianapolis, IN. The 10-year loan amortizes on a 30-year schedule and carries a note rate of 5.31%.
* A $1.5 million loan under the Fannie Mae DUS Small Loan product line for the 48-unit complex known as Villa Serena Apartments in Pittsburg, CA. The 10-year loan amortizes on a 20-year schedule and carries a note rate of 5.56%.
* A $1.5 million loan under the Fannie Mae DUS Small Loan product line for the 19-unit complex known as 800 Traction Apartments in Los Angeles, CA. The 10-year loan amortizes on a 30-year schedule and carries a note rate of 5.50%.
* A $1.465 million loan under the Fannie Mae DUS Small Loan product line for the 12-unit complex known as 509 East 12th Street in New York, NY. The 15-year loan amortizes on a 15-year schedule and carries a note rate of 5.88%.
* A $1 million loan under the Fannie Mae DUS Multifamily Affordable Housing Coop product line for the 111-unit complex known as Birch Run Cooperative in Romulus, MI. The 30-year loan amortizes on a 30-year schedule and carries a note rate of 7.41%.

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