🌴 Sunny Surprises in a Sluggish Sector

Good Morning TIM subscribers, this week we explore:

Notable CRE and equipment financing deals, lenders securing credit facilities, market analysis showing industrial strength but office distress, signs of slowing multifamily construction, life sciences positivity, and a potential foreclosure in Miami. We also have a major lender merger, an unexpected NYC office loan delinquency, and how to capitalize on opportunities. PLUS a new bridge lender, prizes, and the world’s tallest building (for now)…in just 5 minutes!

Let’s get into it.

Top Weekly CRE Deals

• PGIM Real Estate lends $455 million to Alere Property Group

• Bank of China loans $315 million to Lendlease/Ivanhoe JV

• Brookfield provides $200 million to Chirisa’s Data Center

• Northwind Group loans $70 million to Southern Land Company

• CIM Group closes $63.87 million to two Florida hotels

• MF1 Capital refinances Harlem multifamily with a $69M loan

• EverWest secures $61M for its industrial portfolio

• Riyad Bank does $60 million Refi for Bridgeton’s Tribeca Hotel

• DCHFA provides $51 million for an affordable housing project

• CrossHarbor Capital Partners makes $38 million construction loan

Summary
Several noteworthy commercial real estate deals have occurred recently, such as Alere's impressive $455M industrial portfolio financing and Chirisa's $200M data center loan. However, the shadow of rising rates has cast a cloud over some transactions, like CIM Group's hotel loans, which now come with heftier interest. While sectors like industrial, data centers, affordable housing, specialized healthcare real estate, and multifamily continue to shine, it's becoming more crucial to tread carefully in this uncertain landscape.

▲ Winners:
◦ Industrial developers should accelerate projects to capture robust tenant demand
◦ Datacenter investors should develop more properties in undersupplied markets
◦ Multifamily owners can still obtain attractive financing for acquisitions.

▼ Losers:
◦ Hotel owners must renegotiate terms and reduce costs to bolster profits
◦ Office landlords need longer leases and flexible space to manage vacancies
◦ Retailers should reevaluate footprints and shift focus to online channels.

Top Weekly ABL and Equipment Deals

• Golub Capital spearheads a $3.4B unitranche facility for Hyland Software

• Texas Bank delivers $1.2 billion term loan to HighPeak Energy

• HSBC Private Credit Bank arranges $300 million facility for The Prax Group

• Santander Bank closes $250 million AB Revolver with Wind Turbine & Energy Cables Corp

• Summit Hotel Properties finalizes $200M JV credit facility

• eCapital completes $160M+ in ABL deals this summer

• Bank of America secures $100 million credit facility for Enfusion

• SAC Partners grants $44 million to Allstar Marketing Group

• SLR Credit Solutions closes $40 million senior credit facility for Essex Technology

• Siena Lending Group seals a $37 million credit facility for Sharper Image

Summary
Major corporations like HighPeak Energy and Hyland Software are securing large refinancings, showing lenders remain active for creditworthy borrowers. However, banks are pulling back on financing for less-proven businesses, even profitable ones, opening opportunities for alternative lenders. Companies should address maturities early and highlight strengths to lenders while exploring diverse options like asset-based lending. With economic uncertainty, only the most robust credits will find easy financing, so businesses should proactively shore up finances. Still, lenders are willing to back growth for creditworthy firms, but costs and scrutiny are rising.

▲ Winners:
◦ Energy firms have the opportunity to obtain large credit facilities using reserves and assets
◦ Private lenders can capitalize on deals as traditional banks turn cautious.
◦ Tech and software companies can secure growth capital

▼ Losers:
◦ Distressed firms may face rejection as lenders get defensive
◦ Startups and high-risk borrowers will see tougher requirements
◦ Slowing sectors like retail and hospitality may have limited access to capital.

Top Lender Credit Facilities

• H.I.G. Capital (Whitehorse Capital is a debt lender) closes $5.5 billion fund

• Pathlight Capital upsized its credit facility to an astounding $200.6MM

• AP Equipment Financing secures a $200 million credit facility

• Leonid Capital Partners locked in a $200 million loan

• Unlock Technologies secures a $100 million revolving credit facility

• Healthcare Funding Partners receives a $100 million boost from Post Road Group

Summary
Prominent private equity groups and niche lenders have amassed significant funds and credit lines, showcasing that capital is still accessible despite broad uncertainties. The closing of H.I.G.'s fund, significantly above its target, suggests a bullish sentiment among institutional investors, spanning from the U.S. to Latin America. Pathlight's repeated dealings with Franchise Group hint at a growing trend of specialized financing for retail sectors.

▲ Winners:
◦ With H.I.G.'s fund focusing on U.S. middle market companies, there's an opportunity for real estate developers and investors
◦ Equipment lenders like AP Equipment Financing's move signals a robust equipment financing sector
◦ The emphasis on tech and innovation suggests a favorable environment for AI-driven crypto ventures

▼ Losers:
◦ With the economic shifts, there might be stricter scrutiny and lending terms for startups and high-risk borrowers
◦ Retail and Hospitality sectors might face challenges with cautious lenders, especially in the current economic climate
◦ With lenders becoming more defensive, distressed firms might face hurdles in securing financing.

NOW FOR SOME MARKET ANALYSIS…

Summary
After reviewing numerous articles, several trends emerge: The industrial sector thrives. On a disappointing note, Fannie Mae's data points to a dip in multifamily construction. While traditional office spaces grapple with challenges, the life sciences sector is booming per JLL’s bullish assessment, especially in hubs like Boston and San Francisco. Overall, investors continue to seek recession-proof assets even as CBRE hints at a potential peak in rental demand due to slowing growth in some markets.

Key Takeaways
Industrial remains attractive for strategic/defensive investors concerned with a potential market downturn. Niche lenders and savvy investors with cash on hand stand to gain as banks take a step back - but only if they navigate risks with finesse. Multifamily is still strong but sees signs of a peak, while office distress persists. Finally, life sciences developments continue rapid expansion despite biotech funding cool-down.


Biggest Impact
⮞ Construction lenders have ample industrial project funding opportunities, given tenant demand
⮞ Industrial investors should target inventory-constrained logistics markets with ongoing tenant demand
⮞ Net lease investors can benefit from pharmacies and convenience stores businesses amid recession fears.

NOTABLE LENDER MERGER

Breakout Capital and 12Five Capital are joining forces, creating a powerhouse in the fintech and commercial finance space. This merger, backed by Altriarch Commercial Finance, is set to revolutionize how small businesses access financial products, from term loans to asset-based lending. Great news for the ABL community, so send them your applications.

😲 DIDN’T SEE THAT ONE COMING

CRE
A partnership led by developer Yair Levy could lose its downtown Miami mixed-use building after allegedly defaulting on a $27 million construction loan from City National Bank. The potential foreclosure highlights financing risks for developers amid rising interest rates and construction costs.

Shorenstein Properties is facing some tough times with their NYC office at 1407 Broadway, as they've missed a few debt payments. This has led their $350M loan to be closely monitored. It's a challenging period for many landlords, especially with debts maturing, and it reminds us of the hurdles lenders often encounter with office loans nearing their end. Let's hope for brighter days ahead.

🤵 LENDER LOUNGE

Looking to close your CRE deal? This week’s CA bridge lender could help:

Time to Close: 2-3 weeks closing from term sheet signing
Paperwork Required for LOI: Yes, light to full doc
Min to Max Loan: $3M-$30M (sweet spot is $2M to $10M)
Min FICO Score: None
Interest Range: 9.50% to 11%
Loan-To-Value: Up to 70%
Origination Fee: 2 pts
Due-Diligence Fee: varies
Collateral Requirements: Multifamily, Retail, Industrial, Mixed-Use, Medical Office, SFR (NOO), and Student Housing
Repayment Terms: Interest-only for 12-24 months
Pre-Payment Penalty: None
Extension of loan: Yes
Geography: Nationwide with a minimum population of 100,000
Refinance into a longer-term loan: No

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