This week, CRED iQ reviewed the commercial real estate lending landscape and highlighted 5 properties that have secured financing in recent months. The highlighted loan originations featured an in-depth look at a lodging deal with a few structural enhancements prompted by the pandemic as well as 2 multifamily originations and some first looks at commercial mortgage originations that were completed so far in 2022. In certain cases, mortgage loans from properties’ prior financing packages were catalogued in CRED iQ’s system, which enables users to evaluate prior loan terms and pre-origination financial history.
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 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.
JW Marriott Desert Springs
884 keys, Full-Service Hotel, Palm Desert, CA
In prior Lending Landscape reports, the CRED iQ team noted the scarcity of hotel originations in 2021. New lodging originations can serve as guidance for new deals for lenders heading into 2022. Such is the case for this $128 million mortgage that was originated by Goldman Sachs on December 22, 2021 and is secured by the JW Marriott Desert Springs Resort & Spa. The loan was used to refinance $123.2 million in existing debt, which included a senior secured loan as well as a mezzanine loan. The loan required an upfront debt service reserve of approximately $6.5 million that is scheduled to be reduced evenly over a 12-month period. The loan sponsor, Tiffany Lam of Kam Sang Co., Inc., also contributed $2.4 million in equity. Additional structures of the loan include a five-year, interest-only term and a 4.995% interest rate. For comparison, the retired senior secured loan had an interest rate of 5.15%.
Using CRED iQ’s Comps functionality, a comparable loan origination was a $100 million mortgage funded in December 2020 by Ares Management Corporation. The floating-rate loan was secured by the La Quinta Resort & Club, a 777-key resort hotel located 10 miles south of the JW Marriott.
The JW Marriott Desert Springs appraised for a value of $306 million ($346,154/key), as of November 17, 2021, which implied an LTV of 42% and a cap rate of 6.66% based on the originator’s underwritten NCF. It is worth noting that the originator’s underwritten NCF was 37% higher than pre-pandemic NCF for full-year 2019 and 138% higher than 2021 NCF. The 2021 NCF was derived from the trailing 11-month period ended November 2021 plus a 1-month forecast of December 2021 performance. The property produced negative net cash flow in 2020. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | JW Marriott Desert Springs |
| Address | 74-855 Country Club Drive Palm Desert, CA 92260 |
| Property Type | Hotel |
| Property Subtype | Full-Service |
| Building Size | 884 keys |
| Year Built | 1987 |
| Submarket | Palm Springs |
| County | Riverside |
| MSA | Riverside-San Bernardino-Ontario, CA |
| Origination Date | 12/22/2021 |
| Loan Amount | $128,000,000 |
| Interest Rate | 5.00% |
| Valuation | |
| Appraised Value | $306,000,000 ($346,154/key) |
| Appraisal Date | 11/17/2021 |
| Appraisal LTV | 41.80% |
| CRED iQ Base-Case Value | $247,000,000 ($279,393/key) |
Westview Apartments
116 units, Multifamily, Hoboken, NJ
Applied Housing Management Co. secured $32.5 million in mortgage debt from NorthMarq on December 1, 2021 to refinance approximately $17.9 million in existing debt on the Westview Apartments affordable housing complex in Hoboken, NJ. The loan was structured with a 10-year term and a 30-year amortization schedule with an interest rate of 2.92%. 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 until its open period, 4 months prior to maturity. One of CRED iQ’s most relevant comps for this new origination is a $33 million Fannie Mae loan that is secured by Columbian Towers — a 136-unit multifamily property located across the street from Westview Apartments. This comparable loan was originated in October 2016 and has a maturity date of November 1, 2023.
The mortgage debt is secured by fee interest in a 116-unit mid-rise multifamily property located within walking distance of the Hoboken/NJ Transit Terminal at 1 Hudson Place. Of the property’s 116 units, there are 108 affordable units, including 93 units (80% of total unit count) that are leased at rents less than or equal to 50% of area median income (AMI).
The property appraised for $49.4 million, equal to $425,862/unit, as of September 1, 2021, which implied an LTV of 66% and an implied cap rate of 4.83% based on the originator’s underwritten NCF. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Westview Apartments |
| Address | 55 Bloomfield Street Hoboken, NJ 07030 |
| Property Type | Multifamily |
| Property Subtype | Mid Rise |
| Building Size | 116 units |
| Year Built | 1887 |
| Submarket | Hudson Waterfront |
| County | Hudson |
| MSA | New York-Northern New Jersey-Long Island, NY-NJ-PA |
| Origination Date | 12/1/2021 |
| Loan Amount | $32,500,000 |
| Interest Rate | 2.92% |
| Valuation | |
| Appraised Value | $49,400,000 ($425,862/unit) |
| Appraisal Date | 9/1/2021 |
| Appraisal LTV | 65.70% |
| CRED iQ Base-Case Value | $46,700,000 ($402,626/unit) |
Brickstone Villas
222 units, Multifamily, Killeen, TX
Goldman Sachs funded an $8.3 million mortgage on December 10, 2021 to fund the acquisition of Brickstone Villas in Killeen, TX. The 10-year loan was structured with interest-only debt service payments and an interest rate of 4.14%. 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 until its open period, 4 months prior to maturity. One of CRED iQ’s highest scoring loan comps is a $10.5 million loan secured by the Century Plaza Apartments, located less than a mile away from Brickstone Villas. The comparable loan was originated in October 2019 and had an interest rate of 4.15%. Despite the similar interest rate, the comparable loan required amortizing payments based on a 30-year schedule.
Brickstone Villas, a garden-style complex, was renovated by seller prior to its sale to the borrower. As a result, reported occupancy figures prior to origination were as low as 76% in 2020. Occupancy recovered to approximately 92% as of November 2021. The property appraised for $13.1 million, equal to $59,000/unit, as of October 25, 2021, which results in an LTV of 63.5% and an implied cap rate of 5.08% based on the originator’s underwritten NCF. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Brickstone Villas |
| Address | 2812 Lake Road Killeen, TX 76543 |
| Property Type | Multifamily |
| Property Subtype | Garden |
| Building Size | 222 units |
| Year Built | 1976 |
| Submarket | Non-Metro TX |
| County | Bell |
| MSA | Killeen-Temple-Fort Hood, TX |
| Origination Date | 12/10/2021 |
| Loan Amount | $8,320,000 |
| Interest Rate | 4.14% |
| Valuation | |
| Appraised Value | $13,100,000 ($59,000/unit) |
| Appraisal Date | 10/25/2021 |
| Appraisal LTV | 63.50% |
| CRED iQ Base-Case Value | $13,250,000 ($59,681/unit) |
Bankwell HQ
29,500 sf, Suburban Office, New Canaan, CT
One of the first featured originations in 2022 — Citigroup funded an $8.2 million mortgage on January 5th for the acquisition of a single-tenant office building in New Canaan, CT. The interest-only loan was structured with a 10-year term and has an interest rate of 3.74%. 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 until its open period, 4 months prior to maturity.
Despite the presence of a single tenant at the collateral and credit risk weighted heavily on the backend of the 10-year term, the loan was not structured with an anticipated repayment date. The collateral property, a 3-story office building, is leased to Bankwell Financial Group pursuant to a lease that expires in August 2031, which is approximately 4 months prior to loan maturity. The building was renovated prior to Bankwell signing a lease and taking occupancy. The property appraised for a value of $13.5 million, equal to $458/sf, as of October 6, 2021, which resulted in an LTV of 61% and an implied cap rate of 6.66%. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Bankwell HQ |
| Address | 258 Elm Street New Canaan, CT 06840 |
| Property Type | Office |
| Property Subtype | Suburban |
| Building Size | 29,500 sf |
| Year Built | 1983 |
| Submarket | New Canaan |
| County | Fairfield |
| MSA | Bridgeport-Stamford-Norwalk, CT MSA |
| Origination Date | 1/5/2022 |
| Loan Amount | $8,200,000 |
| Interest Rate | 3.74% |
| Valuation | |
| Appraised Value | $13,500,000 ($458/sf) |
| Appraisal Date | 10/6/2021 |
| Appraisal LTV | 60.70% |
| CRED iQ Base-Case Value | $12,050,000 ($409/sf) |
2374-2386 Grand Concourse
20,420 sf, Retail, Bronx, NY
Another example of a 2022 loan origination came in the form of a $6.8 million mortgage originated by Citigroup on January 6th for the acquisition of a 2-story retail building in Bronx, NY. The interest-only loan had a term of 10 years and an interest rate of 3.61%. The loan will be locked out from prepayment for just over 2 years, and defeasance will be permitted after lockout through the remainder of the loan term until its open period, 3 months prior to maturity. One of CRED iQ’s most relevant loan comps is a $15 million loan secured by 237 East Fordham Road, a 24,000-sf retail building also located in Bronx, NY. The comparable loan was originated in 2017 and had an interest rate of 3.93%.
The collateral property is anchored by Blink Fitness pursuant to a 14,000-sf lease, equal to 69% of the NRA, that expires in May 2029, which is about 2.5 years prior to loan maturity. The property was appraised for $11.5 million, equal to $563/sf, as of December 3, 2021, which resulted in an LTV of 59% and an implied cap rate of 5.93%. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | 2374-2386 Grand Concourse |
| Address | 2374-2386 Grand Concourse Bronx, NY 10458 |
| Property Type | Retail |
| Property Subtype | Urban Infill |
| Building Size | 20,420 sf |
| Year Built | 1924 |
| Submarket | Bronx |
| County | Bronx |
| MSA | New York-Northern New Jersey-Long Island, NY-NJ-PA |
| Origination Date | 1/6/2022 |
| Loan Amount | $6,825,000 |
| Interest Rate | 3.61% |
| Valuation | |
| Appraised Value | $11,500,000 ($563/sf) |
| Appraisal Date | 12/3/2021 |
| Appraisal LTV | 59.30% |
| CRED iQ Base-Case Value | $9,347,000 ($458/sf) |
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About CRED iQ
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. Our data platform is powered by over $2.0 trillion of CMBS, CRE CLO, SBLL, Ginnie Mae, FHA/HUD, and Agency loan and property data.
