Epic Deals From Last Week: Clearway Energy $550M, Related Group & Integra $527M, Kushner $415M

Good Morning Everyone

This week in Deals:

$2.60 billion in top 10 CRE deals

Top CRE Lenders
Tyko Capital (backed by Elliott Investment Management), Fortress Investment Group, Rithm Capital, First Citizens Bank, Cerberus Capital Management, Crédit Agricole, Commerzbank, Bank of America, Lloyds Bank, Affinius Capital, and Northwind Group.

🌆Top Weekly CRE Deals

• Clearway secures $550 million financing, starts construction on California solar-plus-storage project Read

• Elliott-Backed Fund Provides $527 Million for St. Regis Condos Planned In Brickell Read

• Kushner Lands $415 Million for New Jersey Mall Redevelopment Read

• First Citizens Bank Serves as Co-Lead Arranger on $315.7 Million in Financing for Four Texas Battery Energy Storage Projects Read

• Cerberus Closes $200 Million Credit Facility for U.S. Data Center Acquisitions Read

• Doral Renewables Secures $200 Million Debt Financing and Executes Construction Contracts for the Remaining Phases of the Mammoth Solar Project Read

• Affinius Capital Supplies $98 million Refi on Queens Apartments Read

• First Citizens Bank Arranges $115 Million in Financing for Illinois Skilled Nursing Facilities Read

• Arevon Achieves $119 Million Construction to Perm Loan for its Ratts 1 and Heirloom Solar Projects in Indiana Read

• Northwind Lends $63 Million on Gramercy Condos Project Read

Summary

Last week, I witnessed a whirlwind of activity in the CRE and renewable energy financing sectors, with deals that made my eyebrows hit the ceiling. The crown jewel was Kushner Cos.' jaw-dropping $415 million construction financing package for the Monmouth Mall redevelopment in Eatontown, N.J. - a project that's set to breathe new life into an aging retail dinosaur, transforming it into a mixed-use open-air town center fit for the 21st century. Hot on its heels was Clearway Energy Group's $550 million financing for a solar-plus-storage project in California. It was a clear signal that green energy is no longer just a feel-good footnote but a significant player in the investment world.

What struck me most was the sheer diversity of loan structures and terms on display. Take Arevon Energy's $299 million financing deal for solar projects in Indiana, for instance. This wasn't your grandpa's loan agreement - it featured a cutting-edge structure with an uncommitted tax equity and tax credit transfer bridge takeout, leveraging the Inflation Reduction Act's provisions like a financial Rubik's cube. With a $119 million construction-to-term loan and a $159 million tax equity and tax credit bridge loan in the mix, it's clear that lenders are bending over backward to accommodate the unique needs of green energy projects. It's a brave new world out there, folks and the financing landscape is evolving faster than you can say "solar panel."

Winners

• Renewable energy companies are in a favorable position, as evidenced by the substantial financing of their solar projects last week

• Data center operators are also seeing positive momentum. They can capitalize on this by emphasizing the growing demand for data storage and processing capabilities in their financing proposals, potentially exploring sale-leaseback arrangements or other creative financing structures to attract capital

• Lenders in the renewable energy space are seeing significant opportunities and can capitalize on this trend by further developing their expertise in structuring complex deals that leverage tax credits and other incentives specific to the renewable energy sector

• Lenders focusing on mixed-use developments are also well-positioned. They can maximize their opportunities by developing comprehensive underwriting models that accurately assess the risks and potential of these multi-faceted projects

Losers

• Traditional retail property owners, particularly those with aging, single-use mall assets, may find it increasingly challenging to secure financing without significant redevelopment or repurposing plans. To mitigate this, these owners could explore partnerships with mixed-use developers or consider gradual transformation plans that can be presented to lenders

• Small-scale commercial real estate developers might find themselves overshadowed by larger, more transformative projects. They could mitigate this by focusing on niche markets or innovative concepts that align with current trends, such as incorporating green technologies or mixed-use elements into their smaller-scale projects

• Lenders specializing in traditional retail financing may find their market shrinking as more malls and shopping centers require significant redevelopment. To mitigate this, these lenders could focus on developing expertise in mixed-use redevelopment financing, potentially partnering with firms experienced in this area to learn best practices

• Single-asset class commercial real estate lenders might struggle in a market that increasingly favors complex, multi-use projects. They could address this by diversifying their portfolios and developing the capability to underwrite more diverse projects. This might involve hiring experts in different asset classes or partnering with other specialized lenders

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Tips For Borrowers

1. Consider leveraging tax credit transfer provisions for enhanced flexibility in renewable energy project financing.

2. Explore mixed financing packages that combine construction-to-term loans with bridge loans for optimal capital structure.

3. Look into opportunities for refinancing seller notes, as demonstrated by Briar Capital Real Estate Fund's $2.3 million refinance in Georgia.

4. For multifamily developments, explore floating-rate loans with interest-only payments, such as Lay Assets' $30 million financing in Brooklyn.

5. Consider long-term power purchase agreements to secure financing for renewable energy projects, as exemplified by Clearway Energy Group's deal.

💡Deal Qualifiers:
In today's market, I'm all about playing it smart. For retail, I'd stress-test those cash flows like there's no tomorrow. I'd ask for models that show how the project stays afloat even if the economy takes a nosedive. Before I'd even think about writing that check, I'd want to see a solid history of similar successful projects. Past performance doesn't guarantee future results, but it sure helps me sleep better at night. For data centers, I'd be looking at market projections and demanding contingency plans if the demand curve starts to flatten. Lastly, I'm all about phased funding these days. Instead of dumping all that cash upfront, I'd structure the loan to release funds based on project milestones in stages. It keeps the borrower on their toes and gives me more control over my exposure.

Financing & Referral Opportunities for Brokers & Lenders:
1) Northern Cal: solar panel manufacturers, battery producers, and even specialized logistics companies
2) New Jersey: interior designers, restaurant groups, and boutique retailers who might be eyeing these revamped locations
3) Illinois: medical waste management companies, specialized laundry services, or even firms developing tech for patient monitoring
4) Data Centers: HVAC manufacturers and installers specializing in data center climate control.

😲Didn’t see that one coming

• Lumio Files Chapter 11 with Stalking Horse Bid from Affiliate of White Oak Global Advisors Read

• LL Flooring Shuts Down After Filing for Bankruptcy Read

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