This week, CRED iQ reviewed the commercial real estate lending landscape and highlighted 5 properties that have secured financing in the past 2 months. Using the CRED iQ platform’s Comps functionality, which features propriety Comps scoring for the CRE loan universe, we compared lending terms and loan structures to get a sense of the trends in the CRE lending environment. In certain cases, mortgage loans from properties’ prior financing packages were catalogued in CRED iQ’s system, which enables users to evaluate prior loans terms and pre-origination financial history. Additionally, we provided valuations for each asset to evaluate leverage levels in relation to originators’ LTVs. The CRED iQ valuations factor in a base-case (Most Likely), a downside (significant loss of tenants), and dark scenarios (100% vacant). For full access to the valuation reports as well as full CMBS loan reporting, including detailed financials, updated tenant information, and borrower contact information, sign up for a free trial here.
Superstition Gateway
495,204 sf, Retail, Mesa, AZ 85209
A $77.1 million loan was originated by KeyBank on September 16, 2021 to refinance existing debt of $81.3 million, which was first reported by Commercial Observer. The borrower, Desert Troon Companies, contributed $5.7 million in equity as part of the deal. The loan was structured with a 10-year term, an interest rate of 3.62%, and a five-year interest-only period. The loan will be locked out from prepayment for 2 years, and defeasance will be permitted after lockout through the remainder of the loan term. The existing debt was held by Carbon Capital IV, a BlackRock US real estate debt fund, and had a floating interest rate of 1M LIBOR + 3.65% over a 3-year initial term.
The Superstition Gateway loan is secured by the fee interest in a 495,204-sf open-air power center that was developed in multiple phases starting in 2006. The property is located within the Phoenix-Mesa-Scottsdale, AZ MSA and features a combination of retail storefronts and ground-leased outparcels. The retail center is shadow-anchored by Walmart and major tenants include Kohl’s (18% of the GLA), LA Fitness (9% of the GLA), and AMC Theatres (8.5% of the GLA). Kohl’s owns its improvements and pays annual ground rent of approximately $221,400 with a lease that expires in January 2027.
The property was 94% occupied as of August 2021; however, the retail property has had pandemic-related tenant issues dating back to Q1 2020. The property’s prior floating-rate mortgage transferred to special servicing in April 2020 when rent collections declined to below 70%. A 5-month forbearance agreement was signed in July 2020 as rent collections started to recover and the prior mortgage returned to the master servicer in December 2020 after all outstanding forbearance amounts were repaid. Rent collections were reportedly at 100% at the time of the new loan’s origination. Tenancy will be a key credit consideration for the current mortgage, especially with approximately 25% of the property’s rent rolling in 2027. An August 26, 2021 appraisal valued the property at $112.6 million, equal to $227/sf, which implied an LTV of 68.5% and a capitalization rate of 6.43% based on the originator’s underwritten NCF. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Superstition Gateway |
| Address | 1614 – 1959 Signal Butte Rd Mesa, AZ 85212 |
| Property Type | Retail |
| Property Subtype | Power Center |
| Building Size | 495,204 |
| Year Built | 2006 |
| Submarket | East Valley |
| County | Maricopa |
| MSA | Phoenix-Mesa-Scottsdale, AZ MSA |
| Origination Date | 9/16/2021 |
| Loan Amount | $77,125,000 |
| Interest Rate | 3.62% |
| Valuation | |
| Appraisal Value | $112,600,000 ($227/sf) |
| Appraisal Date | 8/26/2021 |
| Appraisal LTV | 68.50% |
| CRED iQ Base-Case Value | $92,780,000 ($187/sf) |
Fairway Vista
250 units, Multifamily, West Palm Beach, FL 33409
A $44.8 million loan was originated by CBRE Capital Markets on August 31, 2021 to refinance existing debt on a 250-unit multifamily property located in West Palm Beach, FL. The 10-year loan has a 5-year partial-term interest-only period and has an interest rate of 3.17%. The loan will be locked out from prepayment for 2 years, and defeasance will be permitted after lockout through the remainder of the term. One of CRED iQ’s most relevant comps for this new origination is the $36.5 million Jefferson Palm Beach loan, which is scheduled to mature in August 2023 and has an interest rate of 3.54%. The comparable loan is secured by a 282-unit multifamily complex located about a mile south of the subject.
The Fairway Vista mortgage loan is secured by fee interest in a 250-unit garden-style multifamily community that overlooks the Bear Lakes Country Club. The property is located adjacent to Interstate 95 and is visible from the highway. Across from I-95 are the Palm Beach Outlets. The property was 99% occupied as of August 2021. The property was appraised at a value of $64.0 million, equal to $256,000/unit, as of June 17, 2021, which implied an LTV of 70% and a capitalization rate of 4.53%. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Fairway Vista |
| Address | 1951 Brandywine Road West Palm Beach, FL 33409 |
| Property Type | Multifamily |
| Property Subtype | Garden |
| Building Size | 250 |
| Year Built | 1999 |
| Submarket | West Palm Beach |
| County | Palm Beach |
| MSA | Miami-Fort Lauderdale-Pompano Beach, FL MSA |
| Origination Date | 8/31/2021 |
| Loan Amount | $44,827,000 |
| Interest Rate | 3.17% |
| Valuation | |
| Appraisal Value | $64,000,000 ($256,000/unit) |
| Appraisal Date | 6/17/2021 |
| Appraisal LTV | 70.00% |
| CRED iQ Base-Case Value | $56,650,000 ($226,601/unit) |
384-390 Fulton Street
29,904 sf, Mixed-Use (Retail/Office), Brooklyn, NY 11201
A $32.0 million loan was originated by Argentic Real Estate Finance on September 14, 2021 to refinance existing debt of $21.1 million and return $10.0 million in equity to the loan sponsor, Sutton Management Corp. The 5-year interest-only loan has an interest rate of 3.925%. The loan will be locked out from prepayment for 2 years, and defeasance will be permitted after lockout through the remainder of the term. The existing debt was in the form of a 10-year fixed-rate mortgage, which was originated in 2012 and had an interest rate of 4.95%. CRED iQ’s most relevant comp for the new origination is the $16.1 million 345 Adams Street loan, which is scheduled to mature in December 2022 and has an interest rate of 4.05%. This comparable loan is secured by a 35,000-sf retail condo that features Bright Horizons as a primary tenant and is located two blocks away from 384 Fulton Street.
The 384 Fulton Street property contains 4 stories and approximately 30,000 sf. Duane Reade operates on the ground-floor retail portion of the building with a lease that expires in August 2031, nearly 5 years after loan maturity. The lease terms of Duane Reade are vital to the performance of the loan because the tenant accounts for 75% of the property’s rent. The remaining floors are occupied by office tenants with expiring leases in 2024. Perhaps the most notable feature of the property from a value-add perspective is a zoning ordinance that allows for 76,628 sf in excess development rights. A July 1, 2021 appraisal valued the property at $50.9 million, equal to $1,702/sf, which implied an LTV of 62.9% and a capitalization rate of 4.67% based on the originator’s underwritten NCF. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | 384-390 Fulton Street |
| Address | 384-390 Fulton Street Brooklyn, NY 11201 |
| Property Type | Mixed-Use |
| Property Subtype | Retail/Office |
| Building Size | 29,904 |
| Year Built | 1925 |
| Submarket | Downtown Brooklyn |
| County | Kings |
| MSA | New York-Northern New Jersey-Long Island, NY-NJ-PA MSA |
| Origination Date | 9/14/2021 |
| Loan Amount | $32,000,000 |
| Interest Rate | 3.93% |
| Valuation | |
| Appraisal Value | $50,900,000 ($1,702/sf) |
| Appraisal Date | 7/1/2021 |
| Appraisal LTV | 62.90% |
| CRED iQ Base-Case Value | $48,970,000 ($1,637/sf) |
Los Arcos Apartments
516 units, Multifamily, Houston, TX 77035
The Los Arcos Apartments previously secured an $18.9 million loan that was scheduled to mature in January 2026 and had an interest rate of 4.76%. The borrower, Shyam H. Hingorani, was able to secure $24.95 million in refinancing from KeyBank on September 15, 2021 with a rate of 3.15% and was able to defease the existing mortgage loan. Total defeasance costs for the existing debt were estimated to be $22.0 million. (As a reminder, the CRED iQ platform provides real-time defeasance costs for loans in its database through the integration of the Waterstone Defeasance Calculator into its User Interface.)
The newly originated loan, secured by Los Arcos Apartments, has a 10-year term and requires interest-only debt service payments. The loan will be locked out from prepayment for 2 years, and defeasance will be permitted after lockout through the remainder of the term. CRED iQ’s highest scoring comp is the $27.5 million Westmount At Braesridge Apartments loan combination, which consists of a senior lien $22.1 million mortgage with an interest rate of 4.33% and a $5.4 million junior-lien mortgage with an interest rate of 5.71%. The comparable loan is secured by a 542-unit multifamily property located within a mile of Los Arcos Apartments.
Los Arcos Apartments is a garden-style multifamily complex located in the Southwest submarket of Houston, TX. A $2.9 million renovation on the property was reportedly completed in 2021. The property was 98% occupied as of August 2021; however, historical records indicates occupancy has trended between 91% and 93% over the past several years. A June 7, 2021 appraisal valued the property at $42.3 million, equal to $81,996/unit, which implied an LTV of 59% and a capitalization rate of 5.50% based on the originator’s underwritten NCF. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Los Arcos Apartments |
| Address | 11315 Fondren Road Houston, TX 77035 |
| Property Type | Multifamily |
| Property Subtype | Garden |
| Building Size | 516 |
| Year Built | 1977 |
| Submarket | Southwest |
| County | Harris |
| MSA | Houston-Sugar Land-Baytown, TX MSA |
| Origination Date | 9/15/2021 |
| Loan Amount | $24,950,000 |
| Interest Rate | 3.15% |
| Valuation | |
| Appraisal Value | $42,310,000 ($81,996/unit) |
| Appraisal Date | 6/7/2021 |
| Appraisal LTV | 59.00% |
| CRED iQ Base-Case Value | $39,190,000 ($75,946/unit) |
Dulles Greene
806 units, Multifamily, Herndon, VA 20170
JLL Real Estate Capital provided supplemental financing in the form of a second-lien $11.0 million mortgage loan for Dulles Greene, an 806-unit multifamily property located in Herndon, VA, in close proximity to the Dulles International Airport. The subordinate mortgage was originated on September 23, 2021 and has a 7-year term with a 3.91% interest rate. The loan is interest-only for the first 4 years and would require a yield maintenance charge for prepayment prior to its open period, which starts about 3 years prior to maturity.
Accounting for the newly originated second-lien mortgage, the financing package for the Dulles Greene property totals $139.0 million. The senior mortgage has an outstanding balance of $128.0 million and is scheduled to mature on September 1, 2028, which is co-terminus with the junior debt. The senior mortgage carries an interest rate of 4.40% and requires amortizing debt service based on a 30-year schedule.
Dulles Greene was 96% occupied as of July 2021 and throughout 2020. The property was appraised for $242.0 million, equal to $300,248/unit, as of July 16, 2021, which represented a 23% increase in value compared to a July 2018 appraisal for the property. The 2021 appraisal implied a total debt LTV of 57.4% and a capitalization rate of 4.35%. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Dulles Greene |
| Address | 2150 Astoria Circle Herndon, VA 20170 |
| Property Type | Multifamily |
| Property Subtype | Garden |
| Building Size | 806 |
| Year Built | 1998 |
| Submarket | Herndon |
| County | Fairfax |
| MSA | Washington-Arlington-Alexandria, DC-VA-MD-WV MSA |
| Origination Date | 9/23/2021 |
| Loan Amount | $11,000,000 |
| Interest Rate | 3.91% |
| Valuation | |
| Appraisal Value | $242,000,000 ($300,248/unit) |
| Appraisal Date | 7/16/2021 |
| Appraisal LTV | 57.40% |
| CRED iQ Base-Case Value | $227,000,000 ($281,629/unit) |
CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers to CRED iQ use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities. For full access to our loan database and valuation platform, sign up for a free trial below:
