🏥 🏢 🎵 $4.3 Billion in Deals Last Week: SL Green, Vornado, RadNet, The Cutting Edge

Good Morning TIM Enthusiasts

The past week witnessed a compelling symphony of transactions in the CRE, ABL, and Growth Cap arenas as the market navigated the delicate balance between aspiration and caution. Headlining the CRE space were SL Green and Vornado's $1.1 billion loan extension for 280 Park Ave. and Pacific Elm Properties' $290 million construction loan for Parkside Uptown in Dallas. ABL saw Northleaf Capital Partners' $100 million credit facility to Cutting Edge Group and LSQ's $25 million invoice finance facility for a global pharmaceutical manufacturer take center stage. RadNet's $1.15 billion loan refinancing and CBRE Investment Management's $250 million finance facility from RBS International topped the Growth Cap charts. Grasshopper Bank's launch of a digital SBA loan application marked a notable development in the lending landscape. However, the $1.8 billion loan on San Francisco's Parkmerced complex moving to special servicing and the imminent default on a $430 million loan tied to Meta Platforms' exit from a Manhattan campus underscored the challenges that persist. As we embark on a concise yet illuminating exploration of the key players navigating this intricate financial landscape, we'll uncover the strategies of those flourishing, persevering, and adapting their approach in the face of evolving market dynamics….in just 5 minutes.

Let’s get into it.

🌆Top Weekly CRE Deals

• SL Green & Vornado secure a $1B extension from Deutsche Bank for NYC Tower Read

• $290M in construction financing from Goldman Sachs for Dallas Trophy Office Read

• Monday Properties clinches $206M from Citi for $205M office refi Read

• Origis Energy & MUFG finalize $136M for Florida Municipal Project Read

• Bank of Montreal provides $117M refi for Chetrit’s Harlem Tower Read

• BHI and Be Aviv finance $115M for Flatbush Apartments Project Read

• Rockefeller Group and PCCP secure $100M for Logistics Center Read

• Nationwide delivers $100M refe for nine South Florida industrial assets Read

• Madison Realty Capital provides $97M for construction of Sunlight Develpment’s Hoboken Condos Read

• S3 provides $92M for construction of North Development’s Flushing Condos Project Read

Summary
Last week, we saw a flurry of commercial real estate market activity, with several notable financing deals closing across various property types and markets. SL Green Realty Corp. and Vornado Realty Trust secured a substantial $1.1 billion loan extension for their trophy office tower at 280 Park Ave. in Midtown Manhattan, underscoring the continued confidence in high-quality office assets. In the Dallas market, Pacific Elm Properties obtained a $290 million construction loan for Parkside Uptown, a 500,000-square-foot class-A office development that has already pre-leased nearly half its space to Bank of America. Monday Properties also successfully refinanced two properties in Arlington, Va. - the $173 million loan for 1812 N. Moore St. office tower and $32.5 million for the Shirlington Gateway medical office building - showcasing the market's appetite for well-positioned assets with strong tenant bases.

Lenders primarily focused on experienced and well-established borrowers with high-quality assets in prime locations across major metropolitan areas. New York City saw the most activity, with significant financing deals for trophy office towers as well as multifamily and mixed-use developments in Upper Manhattan and Flushing, Queens. Dallas, Texas, and Brooklyn, New York, were in the spotlight for construction financing of class-A office and multifamily projects, respectively.

Identifying a single top lender last week was challenging, but it is worth noting that commercial banks played a significant role in this week's financing transactions. The average loan size across the featured deals was approximately $242 million, with a mix of refinancing and construction financing activities. The most prominent financing activity was construction lending, with several large-scale office, multifamily, and mixed-use development projects securing financing.

Key Insights

• Trophy office assets with top-notch amenities, accessibility, and strong tenant bases continue to attract financing despite headwinds faced by office landlords nationwide.

• Renewable energy projects, such as solar facilities, are gaining traction and securing significant financing, particularly when backed by municipal initiatives.

• Multifamily and mixed-use developments in desirable locations are seeing strong demand for financing, with lenders recognizing the potential for high-quality residential offerings.

Loan Structures
 Construction Financing
Many of the loans were construction loans or refinancing of recently completed projects:
1) Floating-rate loans with terms of 4-5 years, allowing time for construction, lease-up and stabilization
2) Interest-only periods during construction and lease-up phase

Bridge and Transitional Lending
For unstabilized or transitional assets, common structures included:
1) Floating-rate terms of 2-3 years
2) Interest-only with limited extension options

Permanent Financing
Stabilized assets saw longer-term permanent loans, including:
1) 7-10 year terms with some interest-only
2) Fixed-rate financing via banks, insurance companies, and agency lenders
3) Cashflow-driven underwriting focused on in-place NOI and debt yield
4) Lower leverage in the 55-65% LTV range

Winners:

• Developers with well-positioned assets in desirable locations like New York, Hoboken, and Dallas were able to secure the necessary capital to move forward with their projects

• REITs with well-positioned assets and strong tenant bases continue to access favorable financing terms

• Commercial banks with a focus on high-quality properties in desirable locations continue to capitalize on lending opportunities

• Debt funds specializing in construction lending in high-quality projects in desirable markets like New York and New Jersey
  

Losers:

• CRE brokers focused on lower-tier properties or struggling submarkets may find it more difficult to secure financing for their clients' acquisitions or refinancings

• Real estate agents dealing with older or less desirable residential properties may face headwinds in the current market

• Regional banks with exposure to lower-tier office properties or struggling submarkets may face challenges in the current market

• CMBS lenders with significant exposure to lower-quality office properties or struggling submarkets may face headwinds.

💡 Top Markets/Opportunities:

CRE Lenders:
1) Experienced sponsors with high-quality office assets in prime locations
2) Renewable energy projects backed by municipal initiatives
3) Well-located multifamily and mixed-use developments
4) Construction of class-A office developments with strong pre-leasing

CRE Developers:
1) Mixed-use condominium projects with ground-floor retail in desirable neighborhoods
2) Constructing solar energy facilities in partnership with municipalities

CRE Investors:
1) Well-located multifamily properties with value-add potential
2) Speculative industrial developments in strategic locations

CRE Brokers:
1) Connecting with experienced developers with lenders for construction financing of mixed-use condominium projects
2) Assisting investors in securing acquisition financing for well-located multifamily properties

💸Top Weekly Growth Capital Deals

• RadNet announces closure of its $875M term loan and $282M revolving credit facility Read

• CBRE Investment Management secures new finance facility for indirect secondaries strategy Read

• Victory Park Capital announces $100M credit facility for Sétanta Development Capital Read

• BHI provides a $40M capital call line to a debt fund managed by Northwind Group Read

• Runway Growth Capital provides $40MM in growth investment to CarNow Read

• Edge recently facilitated a $40M revolving credit to FPL Food Read

• Great Rock Capital provides $33M of liquidity to a sponsor-owned pharma company Read

• Finova Capital closes on $30MM senior credit facility Read

• Mountain Ridge Capital provides a $24M credit facility to a national fashion apparel distributor Read

• Red-Syndicate Finance closes $21.9M senior secured financing with Dynamic Farms Read

Top Weekly ABL Deals

• Northleaf Capital Partners leads $100M second lien credit for Cutting Edge Group Read

• LSQ originates $25M invoice credit facility for a global pharmaceutical manufacturer Read

• eCapital provides $20M in ABL funding for waterworks products distributor Read

• Access Capital provides $15M in ABL funding for TalentBridge Read

• LSQ provides a $15M invoice finance facility for a cell phone wholesaler Read

• Rosenthal closes $11M ABL transaction for a seafood importer and distributor Read

• SLR Healthcare ABL provides $9M ABL revolving credit to a nursing home operator Read

• Culain Capital enhances $8.5M AR financing for a Texas warehousing/fulfillment company Read

• eCapital closes $7M in ABL funding for a Michigan-based services company Read

• Republic Business Credit provides $6.75M ABL to a temporary staffing company Read

Summary

Last week saw a diverse range of lending activity across multiple industries, with a focus on providing working capital support and funding for growth initiatives. Lenders remained active in sectors such as healthcare, real estate, automotive, and business services. The top three loans by size were RadNet, Inc.'s $1.15 billion senior secured credit facility refinancing, Victory Park Capital's $100 million credit facility to Sétanta Development Capital, and Northleaf Capital Partners' $100 million asset-backed second lien credit facility to Cutting Edge Group.

Lenders demonstrated flexibility in structuring deals to meet borrowers' specific needs with a mix of asset-based lending, term loans, and revolving credit facilities. The lending landscape continued to support businesses navigating challenges related to growth, cash flow, and traditional bank lending restrictions.

The top lender appears to be eCapital & LSQ, as they closed four transactions in North Carolina, Michigan, Florida, and Illinois. The most prominent financing activities appear to be refinancing existing debt, supporting growth initiatives, and providing working capital. lenders are active across various geographies, with transactions involving borrowers operating in states such as California, Florida, Michigan, New Jersey, New York, and Texas, among others.

Key Insights

• Traditional bank lending restrictions continue to drive borrowers towards alternative lenders who can provide more flexible and tailored financing solutions.

• Asset-based lending remains a popular financing option, particularly for industries with fluctuating working capital needs, such as temporary staffing and distribution.

• Lenders are increasingly comfortable with niche asset classes, such as music royalties and residential land development, as they seek to diversify their portfolios and capture attractive risk-adjusted returns.
  

Loan Structures

• ABL facilities were very common, with revolving lines of credit secured by accounts receivable and in some cases inventory or equipment. The ABL facilities provided by firms like eCapital, LSQ, Republic Business Credit and others ranged from $6-25 million.

• Invoice financing or factoring was another popular structure, used in deals by LSQ and Rosenthal & Rosenthal for example. These facilities, in the $11-15 million range, allowed companies to access working capital by selling their receivables, helping them manage cash flow gaps from slow-paying customers.

• Higher advance rates/borrowing capacity relative to companies' prior facilities, removal of cash flow covenants in favor of borrowing base formulas, and aggressive tenors like the 8-year term loan in RadNet's $1.15 billion refinancing were recurring themes.
  
  Winners:

• Pharmaceutical manufacturing and packaging companies

• Automotive technology platforms

• Asset-based lenders like eCapital Corp., Rosenthal & Rosenthal, and SLR Healthcare ABL

• Specialty finance lenders focusing on niche asset classes and industries like music royalties and residential land development

Losers:

• Businesses with high customer concentration

• Lenders lacking the necessary industry knowledge and risk assessment capabilities

• Lenders with strict credit criteria may struggle to attract and retain clients

💡 Top Markets/Opportunities:
Asset-Based/Growth Cap Lenders: 
1) Diagnostic imaging services companies
2) Automotive technology platforms
3) Pharmaceutical manufacturing and packaging companies

Family Offices
1) Music royalty management companies
2) Cannabis operators with multi-state operations and vertical integration
3) Niche media companies, particularly those with a focus on content creation and distribution

Private Equity Firms
1) healthcare services companies, particularly those focused on outpatient care and specialty services
2) E-commerce fulfillment and logistics companies
3) Renewable energy and sustainability-focused companies

Brokers
1) Companies in the live events and entertainment industry
2) Food and beverage distribution companies

 New Lender Programs

• Grasshopper introduces digital application for streamlined SBA loan processes Read

😲 Didn’t see that one coming

• Santa Monica Place Mall's $300M CMBS loan nears 'Imminent Default' Read

• $1.8B loan for Parkmerced in San Francisco enters special servicing amid regional distress Read

• Histogen opts for voluntary Chapter 11 to optimize wind-down and maximize shareholder returns Read

• Park Avenue South Tech Campus risks default post-Meta's premature lease termination Read

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