This week, CRED iQ reviewed the commercial real estate lending landscape and highlighted 5 properties that have secured financing in the past month. The highlighted loan originations cover most property types (office, multifamily, industrial, lodging, and self-storage), giving a broad range of financing deals that have been completed. Notable among this group of recent mortgage originations is a hospitality loan – an uncommon occurrence given the operational struggles of lodging properties since the onset of the pandemic.
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. 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). Base-case valuations for select properties are provided below. 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.
399 Jefferson Road
206,155 sf, Office, Parsippany, NJ
Prism Capital Partners secured a $37 million loan from KeyBank on October 26, 2021 to refinance existing debt of $35.4 million. The loan was structured with a 10-year term, an interest rate of 4.19%, and an amortization schedule of 30 years. 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 a $62.4 million loan, which was originated on September 15, 2020 and has an interest rate equal to 1-month LIBOR + 4.75%. The comparable loan is secured by a portfolio of 10 office properties located throughout Parsippany, NJ with an average building size of approximately 165,000 sf.
The 399 Jefferson Road mortgage loan is secured by fee interest in a single-story, 206,155-sf office property located in Parsippany, NJ. The property, which contains about 75% office space and 25% R&D space, is 100% leased between two tenants — Remarkable Foods (50% of the GLA) and Zimmer Biomet (50% of the GLA). At loan origination, Remarkable Foods was subleasing its space from Conagra Brands but is committed to a direct lease that takes effect in April 2023. The Remarkable Foods direct lease expires in April 2031 (with 2, 5-year extension options) and the Zimmer Biomet lease expires in July 2028 (with 2, 5-year extension options). The two tenants’ lease expirations, both of which occur prior to loan maturity in November 2031, will be the primary credit events during the loan’s term, absent any tenant bankruptcy action.
The property was appraised at a value of $54.4 million, equal to $264/sf, as of August 13, 2021, which implied an LTV of 68% and a capitalization rate of 6.05% based on the originator’s underwritten NCF. For the full valuation report and loan-level details, click here.
| Subject Property | BBCMS 2021-C12 |
| Name | 399 Jefferson Road |
| Address | 399 Jefferson Road Parsippany, NJ 07054 |
| Property Type | Office |
| Property Subtype | Suburban |
| Building Size | 206,155 sf |
| Year Built | 1968 |
| Submarket | Parsippany-Troy Hills |
| County | Morris |
| MSA | New York-Northern New Jersey-Long Island, NY-NJ-PA |
| Origination Date | 10/26/2021 |
| Loan Amount | $37,000,000 |
| Interest Rate | 4.19% |
| Valuation | |
| Appraised Value | $54,400,000 ($264/sf) |
| Appraisal Date | 8/13/2021 |
| Appraisal LTV | 68.00% |
| CRED iQ Base-Case Value | $49,730,000 ($241/sf) |
445 Vanderbilt
43 units, Multifamily, Brooklyn, NY
A $22 million loan was originated by Société Générale on October 28, 2021 to refinance existing debt of $16.1 million and return approximately $5.2 million in equity to loan sponsors Pinny Loketch and Allan Lebovits. The interest-only loan was structured with a 10-year term and an interest rate of 3.6625%. 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 newly originated mortgage represents financing on an asset with limited operational history given the collateral was developed within the past year; however, terms of the loan appear to be in line with CRED iQ’s comps database. As an example, Greystone originated a $23.5 million 10-year loan in January 2020 that is secured by a 33-unit multifamily property located about 2 blocks away from 445 Vanderbilt. The interest rate for the comparable loan was 3.49% with an amortization schedule of 30 years.
The 445 Vanderbilt mortgage loan is secured by fee interest in a 5-story, 43-unit multifamily property located in the Clinton Hill submarket of Brooklyn, NY. The property was developed in 2021, along with several adjacent townhouses that do not serve as collateral for the mortgage loan. Of the 43 units, there are 13 affordable housing units as required by the property’s 421-a (16) tax exemption, which provides for 35 years of post-construction tax benefits. The 421a affordable units may be rented to tenants at 130% of area median income (AMI). As first reported by New York YIMBY, a lottery for the affordable housing units occurred in August 2021.
The property was appraised at a value of $33 million, equal to $767,442/unit, on September 15, 2021, which resulted in an LTV of 67% and an implied cap rate of 4.43% based on the originator’s underwritten NCF. CRED iQ calculated a value assuming the fully unabated real estate tax for the property. For the full valuation report and loan-level details, click here.
| Subject Property | BBCMS 2021-C12 |
| Name | 445 Vanderbilt |
| Address | 445 Vanderbilt Avenue Brooklyn, NY 11238 |
| Property Type | Multifamily |
| Property Subtype | Mid Rise |
| Building Size | 43 units |
| Year Built | 2021 |
| Submarket | Clinton Hill |
| County | Kings |
| MSA | New York-Northern New Jersey-Long Island, NY-NJ-PA |
| Origination Date | 10/28/2021 |
| Loan Amount | $22,000,000 |
| Interest Rate | 3.66% |
| Valuation | |
| Appraised Value | $33,000,000 ($767,442/unit) |
| Appraisal Date | 9/15/2021 |
| Appraisal LTV | 66.70% |
| CRED iQ Base-Case Value | $25,320,000 ($588,806/unit) |
Glendale Industrial
129,326 sf, Industrial, Los Angeles, CA
A $20 million loan was originated by Starwood Mortgage Capital on October 29, 2021 to refinance existing debt on a 129,326-sf industrial flex property located in the Frogtown submarket of Central Los Angeles, CA. The loan was structured with a 10-year term, an interest rate of 4.80%, and a two-year interest-only period. The loan would require a yield maintenance charge for prepayment, which is permitted after a 6-month lockout period.
The mortgaged property is a former Hostess bakery that was repositioned as industrial flex space in 2013 and includes an adjacent parking lot. The property is 100% leased to Academy Film Studios through September 2036, which is nearly 5 years beyond loan maturity. The tenant is affiliated with the loan’s sponsor, Frank Novak, owner of Modernica Props.
The property was appraised at a value of $38.7 million, equal to $299/sf, as of July 14, 2021. However, the NNN master lease with the property’s single tenant yielded a slightly lower appraisal based on contracted rent, which was deemed to be below market. CRED iQ’s Comp Set Average Rent for the property was $14.67/sf. The as-is appraisal at origination implies an LTV of 52% and an implied cap rate of 4.16%. For the full valuation report and loan-level details, click here.
| Subject Property | BBCMS 2021-C12 |
| Name | Glendale Industrial |
| Address | 2330 Ripple Street Los Angeles, CA 90039 |
| Property Type | Industrial |
| Property Subtype | Flex |
| Building Size | 129,326 sf |
| Year Built | 1935 |
| Submarket | Frogtown |
| County | Los Angeles |
| MSA | Los Angeles-Long Beach-Santa Ana, CA |
| Origination Date | 10/29/2021 |
| Loan Amount | $20,000,000 |
| Interest Rate | 4.80% |
| Valuation | |
| Appraised Value | $38,720,000 ($299/sf) |
| Appraisal Date | 7/14/2021 |
| Appraisal LTV | 51.65% |
| CRED iQ Base-Case Value | $37,140,000 ($287/sf) |
Sorrel River Ranch
56 rooms, Full-Service Hotel, Moab, UT
Commercial mortgage originations secured by lodging properties have been rare sightings in 2021. This $19 million loan was provided by Starwood Mortgage Capital on October 29, 2021 to provide refinancing for existing debt on the Sorrell River Ranch Resort and Spa. The interest-only loan has a 10-year term and an interest rate of 4.02%. 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. Due to the nature of the collateral, the loan was also structured with a seasonality reserve that had a balance of approximately $576,000 at origination. Comparable loans were limited based on property type and location of the collateral; however, this mortgage origination is a prime example of the types of lodging deals that are getting completed in the current landscape.
Perhaps best known for providing guests the option of arriving at the resort via skydiving adventures, the Sorrel River Ranch has 56 rooms across 11 acres in Moab, UT, along the banks of the Colorado River. Average occupancy for the resort was 42% for the trailing 12 months ended August 31, 2021. The ADR and RevPAR for the same period were $1,116 and $469, respectively. The property was appraised at a value of $42.0 million, equal to $750,000 per room, as of October 1, 2021, which resulted in an LTV of 42%. The originator’s underwritten net cash flow for the property implied a cap rate of 9.89%. For the full valuation report and loan-level details, click here.
| Subject Property | BBCMS 2021-C12 |
| Name | Sorrel River Ranch |
| Address | 17 Utah 128 Moab, UT 84532 |
| Property Type | Hotel |
| Property Subtype | Resort |
| Building Size | 56 rooms |
| Year Built | 1999 |
| Submarket | Moab |
| County | Grand |
| MSA | Non-Metropolitan Area-UT |
| Origination Date | 10/29/2021 |
| Loan Amount | $19,000,000 |
| Interest Rate | 4.02% |
| Valuation | |
| Appraised Value | $42,000,000 ($750,000/room) |
| Appraisal Date | 10/1/2021 |
| Appraisal LTV | 42.20% |
| CRED iQ Base-Case Value | $38,960,000 ($695,797/room) |
Fort Storage – Milton, FL
100,105 sf, Self Storage, Milton, FL
KeyBank provided $8.0 million in financing on October 26, 2021 to pay off existing debt on a 100,105-sf self-storage property located in Milton, FL. The interest-only loan had a term of 5 years with an interest rate of 4.42%. One of CRED iQ’s highest rated comps for this new origination is a $6.9 million loan that is secured by a 57,848-sf self-storage facility located further east on the Florida Panhandle. This comparable loan was originated on July 2, 2020 and had an interest rate of 4.34%.
Fort Storage is a self-storage facility in Milton, FL, located about 20 miles northeast of Pensacola. The facility offers a variety of unit configurations, including climate-controlled solutions, ranging in size from 5×5 feet to 20×30 feet. The property was 97% occupied as of October 19, 2021 and was appraised for $15.9 million as of August 2, 2021, which was equal to an LTV of 50%. Based on the originator’s underwritten net cash flow, the implied cap rate for the property was 4.57%. For the full valuation report and loan-level details, click here.
| Subject Property | BBCMS 2021-C21 |
| Name | Fort Storage |
| Address | 4114 Avalon Boulevard Pensacola, FL 32583 |
| Property Type | Self Storage |
| Property Subtype | Self Storage |
| Building Size | 100,105 sf |
| Year Built | 2006 |
| Submarket | Pensacola |
| County | Santa Rosa |
| MSA | Pensacola, FL |
| Origination Date | 10/27/2021 |
| Loan Amount | $8,000,000 |
| Interest Rate | 4.42% |
| Valuation | |
| Appraised Value | $15,860,000 ($158/sf) |
| Appraisal Date | 8/2/2021 |
| Appraisal LTV | 50.40% |
| CRED iQ Base-Case Value | $15,530,000 ($155/sf) |
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:
