🚨 💰 JPMorgan's Jaw-Dropping $900M Loan to Progress Software

[5 Minutes Read] Plus Argo's Luxe $160M Condo Coup

Author

Bridge Loan Guy
March 11, 2024

Good Morning TIM Enthusiasts

Last week, the commercial finance landscape was a tapestry of ambition and caution, with significant deals in CRE, ABL, and Growth Capital painting a picture of a market navigating uncertainty with strategic moves. The CRE space saw Argo Real Estate & Bsafal's $160M luxury condo financing and Apollo's $97M multifamily refinance stand out. In ABL and Growth Capital, JPMorgan's $900M credit revolver for Progress Software and Kennedy Lewis' $550M term loan facility for VoltaGrid took center stage. Lenders like Greystone and Bank of America demonstrated their adaptability, while the $28M Manhattan mixed-use CMBS loan's move to special servicing, NY Attorney’s lawsuit against Merchant Cash Advance firms and BowFlex's Chapter 11 filing served as reminders of the challenges that persist. As we explore the nuances of this financial ecosystem, we'll uncover the strategies of those who are flourishing, holding steady, and pivoting in response to the ever-shifting tides....in just 5 minutes!

Let’s get into it.

Top Weekly CRE Deals


Summary
Last week we saw some significant commercial real estate financing deals close despite the challenging interest rate environment. Notably, the $160M construction loan for JDL Development and Wanxiang America in Juno Beach, Florida; Slate Property Group's $97M refinancing for The Yellowstone in Queens, New York; and a $96M construction financing for an office-to-multifamily conversion in Alexandria, Virginia, by Community Three and Whitaker Investment Corporation. Lenders remain active for strong sponsors and viable projects in multifamily, condo, and retail sectors.

While there were several high-dollar loans this week, no single lender dominated the list. However, Greystone did appear multiple times, providing an $81.1M permanent loan and also closing a $37.2M bridge acquisition loan through its joint venture Greystone Monticello. This shows Greystone's versatility in serving borrower needs across the capital stack.

There was a mix of ground-up construction loans, value-add conversions, refinancings, and acquisitions for financing purposes. The most significant loans tended to be for new luxury condo and apartment developments, followed by value-add plays like office-to-residential conversions. The average loan size across the deals highlighted was approximately $74 million.

Key Insights

  • Several top loans were for ground-up condo and apartment projects or office-to-residential conversions, showing continued demand for new housing supply.

  • The growing build-to-rent sector catering to would-be homebuyers priced out of ownership is also attracting attention from lenders.

  • Retail is also seeing some activity as a component of mixed-use projects.

 Top Opportunities/Markets:

CRE Lenders:
1) Luxury condo development
2) Mixed-Use Development
3) Office-to-residential conversions
4) Build-to-rent development
5) Retail Development
6) Multifamily Development

CRE Developers:
1) Partner with experienced operators with a proven track record of managing build-to-rent developments
2) Consider the power of public-private partnerships like working with nonprofit organizations and government agencies to develop much-needed affordable housing
3) Get in on the ground floor of the next big thing (maybe it's life sciences labs or urban agriculture facilities)

CRE Investors:
1) Ride the wave of the booming build-to-rent market
2) Get in on the ground floor of the life sciences revolution
3) Follow the migration of people (and capital) from high-cost coastal cities to more affordable Sun Belt markets

CRE Brokers:
1) Cultivate relationships with developers who specialize in the office-to-residential conversion niche
2) Start networking with developers who are active in the build-to-rent space
3) Expand your network to include ancillary businesses (architects and engineers to construction firms and property management companies)

Top Weekly ABL and Growth Capital Deals


Insight Summary

Last week, we experienced a surge of significant financing deals across various sectors, with software, energy, retail, and life sciences companies securing substantial credit facilities and term loans. The three highest dollar transactions were Progress Software's $900 million revolving credit facility, VoltaGrid's impressive $710 million financing package, and SLR Equipment Finance's $350 million credit facility from Bank of America and Truist Bank.

California emerged as a hotspot for lending activity, with notable deals involving Newport Beach-based FitLab, and LA-based Armata Pharmaceuticals. Acquisition financing and growth capital were the most common use cases, reflecting a continued appetite for M&A and expansion initiatives. However, we also saw several deals focused on refinancing existing debt, providing working capital support, and financing capital expenditures, underscoring the diverse needs of borrowers in the current environment. Energy/utilities, software, retail, and pharma sectors were particularly active.

Based on the deals highlighted this week, Bank of America emerged as the most active traditional lender, the financing provider behind Progress Software's $900 million credit revolver and $350M credit facility to SLR Equipment Finance.

Key Insights

  • Alternative lenders are stepping up with sizable credit facilities for sponsored and non-sponsored companies, filling a void left by more conservative banks.

  • Texas remains a vibrant market for lending activity, particularly in the energy sector.

  • Growth capital raises are being completed with new credit facilities as companies seek to expand aggressively.

  • We're seeing more "corporate carveout" transactions where divisions or business units secure standalone financing.


💡 Top Markets/Opportunities:
Asset-Based/Growth Cap Lenders: 
1) Oil and gas industry, particularly those with a strong ESG angle
2) Emerging SaaS companies with sticky products and a diversified customer base.
3) Third-party logistics provider or fund equipment purchases for fulfillment centers
4) Companies that manufacture mission-critical components for the military


Family Offices
1) Businesses that provide critical infrastructure or services to the renewable energy industry
2) Companies that help traditional businesses digitize their operations
3) Businesses that provide complementary health and wellness products or services
4) Businesses that support the sustainable agriculture value chain, such as a precision irrigation systems provider or a maker of bio-based fertilizers


Private Equity Firms
1) Look for platform plays in fragmented industries and execute a roll-up strategy to acquire smaller players, capture synergies, and create a more dominant industry presence
2) Acquire legacy businesses with strong domain expertise and customer relationships, then invest in technology and innovation to drive new sources of growth and efficiency.
3) Acquire businesses at the forefront of the shift towards more sustainable and circular business models, such as a biodegradable packaging materials company.


Brokers
1) Reach out to companies looking to expand their footprint in the Cannabis space, whether it's on the cultivation, processing, or retail side of the business
2) Look for ways to help your clients in the home improvement space access the capital they need to stay competitive and capitalize on emerging market trends
3) Target companies driving innovation in the food and beverage space, whether it's plant-based proteins, functional beverages, or upcycled ingredients

 O’Canada

  • Osisko Development kick-starts Cariboo Gold Project with $50M funding Read

  • Grosvenor backs Gardena, Intracorp’s Coquitlam community, with $39.6M Read

  • Kuber boosts credit facility by $20M, total now at $100M Read

 New Lender Programs

  • Lightstone unveils $500M rescue capital initiative Read

  • Allure Bridals introduces a pioneering financing program for U.S. retailers Read


😲 Didn’t see that one coming

  • Coldwater Creek acquires Soft Surroundings following bankruptcy Read

  • $28M Manhattan mixed-use's CMBS loan directed to special servicing Read

  • BowFlex pursues Ch. 11 protection and stalking horse sale agreement Read

  • NYAG files $1.4B lawsuit against merchant cash advance lenders Read

Market Beats

In summary, last week's CRE deals showed a shift towards geographically diverse markets, a rise in alternative lenders, a focus on refinancing, and an emphasis on mixed-use and specialty assets. In contrast, the previous week's deals were concentrated in coastal cities, dominated by traditional banks, and focused on acquisition and construction financing for standalone asset classes like hospitality and industrial.

In ABL/Growth Cap deals, we saw a shift towards software, energy, and life sciences sectors, with the emergence of new lenders like Hayfin Capital Management and Innoviva. Loan purposes focused on strategic initiatives and equipment financing, and venture debt deals rose in prominence. In contrast, the previous week's deals were concentrated in the retail sector, dominated by established lenders, and focused on general corporate purposes, working capital and growth capital needs through traditional ABL and cash flow loans.

Key Insights

  • Deal flow may have slowed, but lender appetite for large transactions with strong sponsors remains robust

  • The broader market seems to gravitate towards smaller, more targeted transactions and could signal a more cautious approach as lenders navigate uncertainty.

  • More distressed headlines alongside new financing vehicles suggest a market in flux, with pockets of distress alongside opportunistic capital targeting special situations.

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