🏦💰 Affinius Capital $165 Million Midwest Multifamily Makeover

[4 Minutes Read] Plus Warby Parker's $120M Fashion Forward Financing

Author

Bridge Loan Guy
March 05, 2024

Good Morning TIM Enthusiasts

Last week, the financial market navigated through a blend of ambition and caution across Commercial Real Estate, Asset-Based Lending, and Growth Capital sectors. Affinius Capital's standout deals included a $165M refinance for Columbus multifamily properties and $150M for an industrial portfolio, indicating robust activity in these sectors. The ABL scene was highlighted by JPMorgan Chase's $120 million credit facility to Warby Parker, showcasing the strategic leverage firms are seeking for growth. Yet, the week also bore witness to sobering moments, such as Avison Young's default and the restructuring that ensued, and CGI Merchant Group's $285 million loan default on a high-profile hotel, emphasizing the ever-present risks. New loan programs like Climate First Bank's reduced solar loan rates suggest a shift towards sustainability. As we delve deeper, we uncover the entities adapting, overcoming, and sometimes faltering, in this complex financial ecosystem....in just 4 minutes!

Let’s get into it.

  • Top Weekly CRE Deals


    Summary
    Last week in the capital markets, we witnessed a flurry of activity that has everyone buzzing. Thrive Companies' securing a staggering $165.7 million to refinance multifamily properties in Columbus, Ohio, topped the charts, signaling a robust interest in the residential sector in emerging markets. Close on its heels, Ares Industrial Management's acquisition of a $150 million loan for a sprawling industrial portfolio across six states highlighted the growing appetite for industrial spaces driven by e-commerce and logistic expansions. Not to be overshadowed, Madison Realty Capital's $133 million loan for a luxury hotel in Manhattan's Hudson Yards showcased the enduring allure of high-end hospitality investments, even in a post-pandemic world.

    This week, the top lender by number and size was Affinius Capital originating loans up to $165.7 million for multifamily refinancing. The average loan amount was $103 million. The most prominent lending activity was refinancing across various commercial assets like multifamily, hotel, mixed-use condo, portfolio acquisitions and new development.

    Key Insights

    Affordable housing remains an attractive investment despite economic uncertainty. Industrial assets are still sought-after thanks to ongoing demand for logistics space. Luxury hospitality may thrive in major metros as travel recovers post-COVID.


    🔑 Top Opportunities/Markets:
    CRE Lenders:
    1) Sponsors with e-commerce and logistics/warehousing businesses.
    2) Hotel owners and operators in regions expecting an imminent tourism rebound post-pandemic.
    3) Alternative asset management firms raising opportunistic real estate funds.

    CRE Developers:
    1) Alternative asset managers or real estate private equity funds acquiring land parcels for new industrial warehouse development in inventory-constrained logistics markets near major freight infrastructure.
    2) Hotel operators and brands opening new locations to construct luxury properties in high-barrier coastal markets.

    CRE Investors:
    1) Distressed lodging assets
    2) Class-B warehouse distribution centers in spanning tertiary metros.

    CRE Brokers:
    1) Mixed-use developers crafting vibrant projects adjoining new infrastructure for one-of-a-kind assets.
    2) Family offices and multifamily players seeking portfolio repositioning.


    Top Weekly ABL and Growth Capital Deals


    Insight Summary

    Last week, we experienced a notable shift in the asset-based lending landscape, underscored by some significant transactions reflecting current economic undercurrents and market sentiments. Most prominently, the financing agreements entered by Warby Parker, with a revolving credit facility of up to $175 million, and The Children’s Place, securing a $78.6 million interest-free term loan, underscore a growing preference for flexible, scalable financial solutions among retail sectors. These deals, alongside Cerebro Capital's success in facilitating over $100 million in financings across various structures, underscore a vibrant activity hub in cities like New York, San Francisco, and Chicago, where technology, retail, and fitness equipment companies aggressively seek growth capital.

    Last week, JPMorgan Chase was the top lender as Administrative Agent on Warby Parker's $120 million revolving credit facility. The average loan size for reported transactions was $16 million. Refinancing activity was most prominent to take advantage of lower rates or obtain better structures from non-bank lenders.

    Key Insights

    Lenders are focused on providing credit facilities to consumer goods companies, equipment companies and import/export businesses to support inventory, growth and working capital. The apparel retail and restaurant sectors seemed especially strong. This signals optimism in consumer spending power despite rising interest rates and inflation.


    💡 Top Markets/Opportunities:
    Asset-Based/Growth Cap Lenders: 
    1) Fitness distributors
    2) Digital brands (strong consumer following and omni-channel strategy) in upstart e-commerce plays.
    3) Home health/hospice sector.


    Family Offices
    1) Emerging ABL or private credit shops looking to grow wallet share in the middle market.
    2) Unique import/export cases like that seafood supplier or perishable goods cold storage outfit.


    Private Equity Firms
    1) Sponsor-backed platforms emerging across healthcare services, education, and equipment finance.
    2) Tech-enabled lending disruptors like Cerebro Capital, positioned to capture share from banks in turnaround and other credit situations.


    Brokers
    1) working capital solutions or bridge financing with vocational training institutions and home health providers.
    2) Existing mid-market relationships placed previously. Previous transactions involved refinancings with non-bank lenders as rates tick higher. Now might be the window for clients to reduce borrowing costs ahead of more aggressive hikes, whether via lower fees, better advance rates, or improved covenants.

     O’Canada

     New Lender Programs


    😲 Didn’t see that one coming

    • Avison Young's default and downgrade signal a major restructuring move Read

    • The iconic D.C. hotel faces a financial crunch with a $285M loan default Read

    • NRIA's shocking confession reveals a $658M CRE Ponzi scheme Read

    • Loan Factory faces legal heat over alleged misuse by loan officers Read

    Market Beats

    While the overall deal count remained robust, the market seems to have downshifted from the prior week's euphoric growth and mega-financings to a more subdued and selective stance. Lenders and investors are becoming cautious, favoring stable, income-generating assets over speculative development and frontier technologies. At the same time, signs of distress and default, though still sporadic, are creeping into the headlines, hinting at potential trouble spots ahead. Market participants may be wise to balance opportunistic growth with disciplined risk management in the coming weeks.

    Key Insights

    • Average deal sizes shrank, pointing to a slight weakening in market confidence.

    • Red-hot renewable energy sector may be taking a breather after a blockbuster previous week.

    • Lenders seem to be prioritizing stable cash flows and hard assets over riskier growth plays in the near term.

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