The $1.2 Billion-Dollar Loan Extension Shaking Up CRE

Good Morning TIM Enthusiasts

Last week showcased a dynamic interplay between CRE and ABL, reflecting a market balancing ambition with prudence. RXR fortified its CRE strategy with a notable $1.2B loan extension, while Crow Holdings' $252M investment in Seattle punctuated the list. In the ABL arena, New Fortress Energy and SoFi made headway with credit facilities of $856M and $375M, respectively. The lender sphere was abuzz with Above Lending's $200M alliance with ATLAS SP and Old National's merger with CapStar. Globally, Tether's significant financing for Northern Data and Blackstone's student housing acquisitions in the UK stood out. However, amidst these triumphs were cautionary tales, with Luzzatto Co. and Astra navigating financial turbulence. Let’s dive in for a closer look at who's thriving, surviving, and rethinking their playbook in this intricate financial ballet…PLUS, an Illinois Equipment Bridge lender…in just 4 minutes!

Let’s get into it.

Top Weekly CRE Deals

• RXR secures 5-year $1.2B loan extension with Morgan Stanley & AIG Read

• Global Atlantic Financial Group offers $263M Refi loan to Dermot Read

• Crow Holdings & Panattoni secure $252M from PCCP for Seattle project Read

• Affinius Capital & Bank OZK greenlight $102M Philly construction loan Read

• Bank OZK & PGIM fund $76M construction loan for Houston cold-storage Read

• JPMorgan backs Related's Jersey City multifamily debut with $58M Read

• Life Insurance Co lends $52.27M for a Minnesota industrial portfolio Read

• First Citizens Bank funds $44M Philly distribution construction center Read

• Pennybacker Capital extends $42M loan on Texas apartment property Read

• Berkadia bridges $36M loan for Georgia's 276-unit Class A community Read
  
  Extra, Extra

• Beach Point Capital Mgmt leads $47M refinance loan Read

• Citi’s West Chelsea's $22M loan Read

• Huntington National’s Viking Partners' $31M loan Read

• IECA’s $10.9M C-PACE financing Read

• District Capital’s dollar-store portfolio $5M loan Read

• Flatbay Capital’s HVAC supply company $2.5M bridge loan Read

• Bernard Financial’s retail property $2.4M loan Read

Summary
Last week, the commercial real estate financing market witnessed over $1 billion in fresh loan closures spanning various asset classes. RXR's significant $980 million loan adjustment for its 1285 6th Ave office tower in NYC stood out. Such moves indicate lenders' willingness to negotiate with premier sponsors amidst market fluctuations. Crow Holdings garnered $252M for three warehouses near Seattle, highlighting ongoing tenant interest. Simultaneously, The Dermot Company secured $263M for a luxury 502-unit NYC building, emphasizing multifamily's allure. While capital is accessible for elite sponsors and assets, stricter underwriting norms prevail. Banks prioritize established connections, favoring floating rate structures to guard against potential rate increases. Despite market instability, lucrative prospects are present. For the last two weeks, the industrial and multifamily sectors dominated lending, signaling their perceived stability in volatile times.

▲ Winners:
◦ Capital-rich PE firms capitalize on their reputation to secure deals, whereas newcomers face challenges. Lenders highly value relationships with elite PE entities.
◦ Amid banking volatility and tighter lending, alternative lenders are filling the gap by catering to riskier borrowers with floating rates, thereby enhancing their market dominance.

▼ Losers:
◦ Amid remote work trends causing uncertainty in office demand, lenders are hesitant to fund new projects without pre-leasing, instead favoring stable assets in sectors like multifamily.
◦ Amid investor uncertainty and market volatility, widening spreads in CMBS yields make securitization costly and restrict lending opportunities in the CMBS market.

Top Weekly ABL and Growth Capital Deals

• New Fortress Energy secures $856M credit facility (lender undisclosed) Read

• SoFi collaborates with BlackRock on $375M personal loan securitization Read

• PNC, BofA, & JPMorgan Chase head $275M credit facility for Stoneridge Read

• MidFirst Business Credit fosters $25M lending bond with LDC Stone Read

• Wells Fargo extends $25M revolving loan to Performant Financial Read

• Wintrust announces $15M credit line for booming third-party logistics firm Read

• Sanguine Biosciences secures $10M from Catalio Capital for growth Read

• Briar Capital concludes $10M DIP loan to Texas chemical manufacturer Read

• Tradecycle funds $3M finance facility for sports equipment in July Read

• LSQ establishes $1.5M finance facility for glass manufacturer Read
  

Insight Summary
The past week marked robust activity in asset-based lending, equipment financing, and growth capital sectors, supporting various industries. The leading deals were New Fortress Energy's $856 million, SoFi's $375 million partnership with BlackRock, and Stoneridge's $275 million facility. Most revolved around refinancing for favorable rates or extended maturities, while others, like Tradecycle's $3 million, provided growth capital. Predominant states were Texas, New York, California, and Michigan. Major refinancings ensured rate benefits and expansion flexibility, while securitizations, such as SoFi's, introduced fresh liquidity, emphasizing finance opportunities for mid-tier firms. Last week outperformed the previous week's lending landscape with larger deals and broader sector diversity. However, a slight contraction in the middle market segment was observed, suggesting a nuanced market evolution.

▲ Winners:
◦ Through securitizations like SoFi's deal, fintechs and specialty lenders obtain fresh capital, amplifying their lending outreach and serving a broader customer base.
◦ Banks harness refinancings to earn arranger and amendment fees, solidifying client relations in a fierce market and driving revenue without incurring acquisition costs.

▼ Losers:
◦ In a rising rate environment, startups and high-growth firms face challenges securing initial funding due to investor caution. This can impede their growth trajectories.
◦ As rates climb, high-yield lenders confront increased default risks and fewer refinancing options. Rate hikes particularly impact their riskiest borrowers.

Lenders

• Above Lending finalizes $200M warehouse facility led by ATLAS SP Read

• Old National joins forces with Nashville's CapStar Read

Insight Summary
Last week witnessed major shifts in capital and credit markets, with Above Lending clinching a $200-million deal with ATLAS SP for consumer debt solutions. Simultaneously, Old National is merging with CapStar, amplifying their stance in Nashville and a robust $3.3 billion in assets. Both companies are capitalizing on Tennessee and North Carolina's recognition as 2023's top business states, with CapStar acclaimed as Tennessee's premier bank for three years running.

▲ Winners:
◦ Business owners in North Carolina and Tennessee stand to benefit from the merger of financial titans, gaining access to enhanced banking services and diverse lending options.
◦ Above Lending, more than a mere company, is shaping the consumer loan landscape, potentially spurring increased sector activity, competition, and profitability.

▼ Losers:
◦ Amid the evolving banking landscape, investors solely tied to traditional banking models might need to diversify and embrace emerging financial strategies.
◦ When banking giants like Old National and CapStar merge, competing regional banks may need to recalibrate their strategies to maintain market presence.

Market Insights
Last week, California, Illinois, and Texas dominated CRE, ABL, and Growth Capital transactions. Pennsylvania highlighted construction endeavors like Tac-Pal Logistics Center's massive 700,000 square feet Philadelphia facility. Property sales thrived in California, Illinois, and Massachusetts, with Ocean West Capital Partners acquiring five logistics properties in California's Inland Empire and Central Valley. New York, Chicago, and Dallas reinforced their statuses as metro giants for CRE deals.

Key Insights

⮞ Regional banks face rising delinquencies in office and retail sectors but maintain activity in multifamily lending.
⮞ Public data center REITs anticipate AI expansion beyond training to boost demand for their interconnected portfolios in key metros.
⮞ Commercial Chapter 11 filings surged 106% in October 2023 from the prior year, prompting banks like Ally Financial to tighten auto loan standards and hike rates to counter risk.

International

• Tether provides Northern Data with a sizable $610M debt financing cap Read

• Blackstone acquires student housing in London & Edinburgh for €424m Read

• Great Bay secures $247M credit facility with MUFG Bank & Natixis Read

• Premier Health secures $50M acquisition financing from RBC group Read

• Cheyne Capital partners with Hines/Peterson Group JV on €80m loan Read

• Funding Societies secures $7.5M from Norfund to champion SMEs Read

• Lomar lands a $37M loan courtesy of Macquarie Read

😲 Didn’t see that one coming

• Luzzatto Co. faces default on $48M loan tied to ex-Sweetgreen HQ Read

• CrossHarbor acquires San Francisco office building via foreclosure auction Read

• Fannie Mae initiates foreclosure on 11 rent-stabilized NYC properties Read

• Brookfield snaps up bankrupt Cyxtera data center operator for $775M Read

• Astra faces liquidity crunch, resulting in loan default Read

🤵 LENDER LOUNGE

Looking to close your Equipment deal? This week’s Illinois lender could help:

Time to Close: 4 weeks on average
Paperwork Required for LOI: Detailed equipment list, current and prior years financials, locations of the M&E, Appraisals in lieu of if available, debt schedule if M&E is encumbered
Type of Equipment Financed: We don’t work in Aviation, Marine, Rail, Cannabis, Farming, or IT. The majority of our customers are in manufacturing, packaging, and transportation industries
New vs. Used Equipment: We offer Asset-Based loans against existing machinery and equipment and look at the liquidation value
Min to Max Loan: $1M to $20M
Sweet Spot: $1M – $20M
Min FICO Score: N/A, we will never decline anyone for financials or years in business.
Interest Range: Prime + 5 to 10
Loan-To-Value: 60% to 90% depending on industry
Origination Fee: 4%, ½ of which is paid to the broker of record
Due-Diligence Fee: Application is free. We collect a due diligence fee to start underwriting and send a team of appraisers to the location to appraise the M&E once a term sheet is signed. This fee starts at $10K and increases depending on the complexity of the legal documents required (i.e. for a merger and acquisition) or if they have collateral at multiple locations in North America
Collateral Requirements: We need a 1st on the M&E, and we file a blanket on other assets. We work with AR, ABL, CRE, and Inventory lenders where each of us will subordinate on the other collateral
Repayment Terms: 2 or 3-year terms amortized over 4 or 5 years
Equipment Inspection: Yes, we need to complete an onsite appraisal
Pre-Payment Penalty: 4% for the 1st year, 3% for the 2nd, and 2% for the final and subsequent years.
Extension of Loan: We can refinance after the 2nd year for a 1% origination fee
Geography: We lend across the USA and Canada (except for Quebec)
Refinance into a longer-term loan: We can refinance after the 2nd year for a 1% origination fee
Insurance Requirements: Yes, we require liability and property coverage 
Vendor Restrictions: No
Lease vs. Loan Options: We offer lines of credit, sale-leasebacks, and loans. Rates are the same for all three products
Equipment Disposal/Return: 20% buyout at the end

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