This week, CRED iQ reviewed the commercial real estate lending landscape and highlighted five properties that have secured financing in March 2022. The highlighted loan originations feature five different property types — office, retail, industrial, multifamily and self storage. The two largest new originations are secured by properties located in the Los Angeles MSA.
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.
Romaine & Orange Square
122,411 sf, Medical and Creative Office, Los Angeles, CA
A $68 million loan was originated by Deutsche Bank on March 11, 2022 to refinance existing debt on two office properties in Hollywood, CA. As part of the transaction, approximately $10.8 million of equity was returned to the borrower. The interest-only loan has a 10-year term and was structured with an interest rate of 4.44%. The loan will be locked out from prepayment for about two years, and defeasance will be permitted after lockout through the remainder of the loan term until its open period, seven months prior to maturity.
Using CRED iQ’s Comps functionality, the highest scoring loan comparison was Henson Studio, which is secured by a 79,940-sf creative office owned by the Jim Henson Company. The loan was originated in May 2017 with a balance of $5.1 million, which has since amortized to a balance of $3 million. The comparable loan’s interest rate is 4.76%, which is 32 bps higher than the new origination presumably due to the single-tenant, owner-occupied nature of Henson Studio.
Romaine & Orange Square comprises two buildings. The larger 91,286-sf building is a six-story medical office building that features four levels of parking, including a subterranean garage. Despite the parking component, the buildings primary tenant, healthcare provider Kaiser, requires additional parking to satisfy its business needs. Kaiser occupies 79% of the NRA of the larger office building. Kaiser’s lease expires in September 2028, which is more than three years before loan maturity. The smaller property is a 31,125-sf creative office building that features multiple tenants that require media and post-production space.
The property was appraised at a value of $109 million ($890/sf) as of January 11, 2022. The appraisal resulted in an LTV of 62%, and an implied cap rate of 4.99% based on the originator’s underwritten NCF. The debt yield came in at 8.0%, also based on NCF from the originator’s underwriting. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Romaine & Orange Square |
| Address | 7007 Romaine Street Los Angeles, CA 90038 |
| Property Type | Office |
| Property Subtype | CBD |
| Property Size | 122,411 sf |
| Year(s) Built | 2018 and 1928 |
| Submarket | Hollywood |
| County | Los Angeles |
| MSA | Los Angeles-Long Beach-Santa Ana, CA |
| Origination Date | 3/11/2022 |
| Loan Amount | $68,000,000 |
| Interest Rate | 4.44% |
| Debt Yield (UW NCF) | 8.00% |
| Valuation | |
| Appraised Value | $109,000,000 ($890/sf) |
| Appraisal Date | 1/11/2022 |
| Appraisal LTV | 62.30% |
| CRED iQ Base-Case Value | $91,850,000 ($750/sf) |
Whizin Market Square
136,746 sf, Retail, Agoura Hills, CA
Benefit Street Partners Realty Trust funded a $40.25 million mortgage on March 14, 2022 to refinance existing floating-rate debt on Whizins Mall Shopping Center, a retail property in Agoura Hills, CA, located approximately 40 miles west of Los Angeles. The loan has a term of 10 years and requires interest-only debt service payments with an interest rate of 4.76%. Prepayment provisions for the loan include yield maintenance until the loan’s open period, which starts four months prior to maturity. One of CRED iQ’s highest scoring comps is an $11 million loan secured by the Agoura Meadows Shopping Center, which is located less than a mile away from Whizin Market Square. The comparable loan was originated in February 2020 and had an interest rate of 3.16%, which is more than 150 bps lower than the new origination.
Whizin Market Square is a six-building retail center with high visibility along Ventura Freeway, although access to the property requires an off-ramp exit to a parallel road. The property’s largest tenant is a DIY Home Center, which operates in a 40,500-sf freestanding building. The tenant accounts for 30% of the property’s NRA and has a lease that expires in December 2026. The remaining tenant roster consists of many small businesses without a noticeable presence of national retailers. A December 26, 2021 appraisal resulted in a value of $64 million ($468/sf), equal to an LTV of 63%. The implied cap rate based on the originator’s underwritten NCF was 5.55% and the debt yield was equal to 8.8% based on the same metric. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Whizin Market Square |
| Address | 28854-28752 Roadside Drive Agoura Hills, CA 91301 |
| Property Type | Retail |
| Property Subtype | Anchored |
| Property Size | 136,746 sf |
| Year(s) Built | 1954 – 2017 |
| Submarket | West SF Valley |
| County | Los Angeles |
| MSA | Los Angeles-Long Beach-Santa Ana, CA |
| Origination Date | 3/14/2022 |
| Loan Amount | $40,250,000 |
| Interest Rate | 4.76% |
| Debt Yield (UW NCF) | 8.83% |
| Valuation | |
| Appraised Value | $64,000,000 ($468/sf) |
| Appraisal Date | 12/26/2021 |
| Appraisal LTV | 62.89% |
| CRED iQ Base-Case Value | $54,660,000 ($400/sf) |
VVF
638,595 sf, Industrial Manufacturing, Cincinnati, OH
Bank of Montreal originated a $20.8 million loan on March 11, 2022 to finance the acquisition of a 638,595-sf manufacturing facility in Cincinnati, OH. The interest-only loan has a 10-year term and an interest rate of 4.80%. The loan will be locked out from prepayment for about two years, and defeasance will be permitted after lockout through the remainder of the loan term until its open period, four months prior to maturity. Many of CRED iQ’s property comps for the VVF manufacturing facility are part of larger industrial portfolios and trend towards more traditional warehouse use types. The highest scoring comparable property was 500 Murray Road, a 366-584-sf single tenant warehouse located approximately one mile away from VVF. The loan was originated in 2015 and had a 4.03% interest rate.
The VVF collateral property is a single-tenant manufacturing facility. VVF manufactures personal care products, and the property primarily engages in the production of bar soap. The facility has extensive rail access and capabilities, including one of the largest rail yards in the region. VVF’s lease is structured as NNN and is scheduled to expire in February 2042, which is approximately 10 years after loan maturity. A January 31, 2022 appraisal stated a value of $35.9 million ($56/sf), equal to an LTV of 58%. The implied cap rate based on the originator’s underwritten NCF was 6.30% and the debt yield was equal to 10.9% based on the same metric. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | VVF |
| Address | 5117 Spring Grove Avenue Cincinnati, OH 45217 |
| Property Type | Industrial |
| Property Subtype | Manufacturing |
| Property Size | 638,595 sf |
| Year(s) Built | 1888 |
| Submarket | Hamilton County West |
| County | Hamilton |
| MSA | Cincinnati-Middletown, OH-KY-IN |
| Origination Date | 3/11/2022 |
| Loan Amount | $20,820,000 |
| Interest Rate | 4.80% |
| Debt Yield (UW NCF) | 10.86% |
| Valuation | |
| Appraised Value | $35,900,000 ($56/sf) |
| Appraisal Date | 1/31/2022 |
| Appraisal LTV | 57.99% |
| CRED iQ Base-Case Value | $35,800,000 ($56/sf) |
Oak Ridge Apartments
208 units, Multifamily, Southfield, MI
A $9 million loan was originated by Starwood Mortgage Capital on March 14, 2022 to refinance a $4 million Fannie Mae loan that was secured by Oak Ridge Apartments, a 208-unit multifamily property located in Southfield, MI. The existing debt had an interest rate of 7.22% and was not scheduled to mature until December 2031. The new origination has an interest rate of 4.56%. The 10-year loan amortizes based on a 30-year schedule. The loan will be locked out from prepayment for about two years, and defeasance will be permitted after lockout through the remainder of the loan term until its open period, four months prior to maturity.
One of CRED iQ’s highest scoring comps is a $5.7 million loan originated by Citigroup on November 17, 2021 that is secured by Willow Tree Apartments, a 78-unit multifamily property located less than a mile away from Oak Ridge Apartments. The comparable loan had an interest rate of 3.73% with a similar loan structure.
Oak Ridge Apartments was appraised at a value of $16.4 million ($78,846/unit) as of February 16, 2022. The appraisal resulted in an LTV of 55%, and an implied cap rate of 5.52% based on the originator’s underwritten NCF. The debt yield came in at 10.0%, also based on NCF from the originator’s underwriting. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Oak Ridge Apartments |
| Address | 26717 Berg Road Southfield, MI 48034 |
| Property Type | Multifamily |
| Property Subtype | Garden Style |
| Property Size | 208 units |
| Year(s) Built | 1979 |
| Submarket | Southfield N of 10 Mile |
| County | Oakland |
| MSA | Detroit-Warren-Livonia, MI |
| Origination Date | 3/14/2022 |
| Loan Amount | $9,000,000 |
| Interest Rate | 4.56% |
| Debt Yield (UW NCF) | 10.05% |
| Valuation | |
| Appraised Value | $16,400,000 ($78,846/unit) |
| Appraisal Date | 2/16/2022 |
| Appraisal LTV | 54.88% |
| CRED iQ Base-Case Value | $13,820,000 ($66,465/unit) |
Buckley Self Storage & RV
82,720 sf, Self Storage and RV Parking, Buckley, WA
A $2.75 million loan was originated by Benefit Street Partners Realty Trust on March 17, 2022 to refinance existing debt on a self storage and RV parking facility located in Buckley, WA, approximately 40 miles southeast of Seattle. The 10-year loan was structured to amortize based on a 30-year schedule and has an interest rate of 5.44%. The loan will be locked out from prepayment for about two years, and defeasance will be permitted after lockout through the remainder of the loan term until its open period, four months prior to maturity. CRED iQ’s highest scoring loan comp is a $6 million loan secured by Enumclaw Plateau Self Storage, which is located about 10 miles away from Buckley Self Storage. The comparable loan was originated in May 2021 and had an interest rate of 3.71%, which is more than 150 bps lower than the new origination.
Buckley Self Storage, which includes 62 recreational vehicle pads, was appraised at a value of $5.3 million ($64/sf) as of February 10, 2022. The appraisal resulted in an LTV of 52%, and an implied cap rate of 6.97% based on the originator’s underwritten NCF. The debt yield came in at 13.4%, also based on NCF from the originator’s underwriting. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Buckley Self Storage & RV |
| Address | 26306 Washington 410 Buckley, WA 98321 |
| Property Type | Self Storage |
| Property Subtype | Recreational Vehicle Parking |
| Property Size | 82,720 sf |
| Year(s) Built | 1988 |
| Submarket | Buckley |
| County | Pierce |
| MSA | Seattle-Tacoma-Bellevue, WA |
| Origination Date | 3/17/2022 |
| Loan Amount | $2,750,000 |
| Interest Rate | 5.44% |
| Debt Yield (UW NCF) | 13.40% |
| Valuation | |
| Appraised Value | $5,300,000 ($64/sf) |
| Appraisal Date | 2/10/2022 |
| Appraisal LTV | 51.90% |
| CRED iQ Base-Case Value | $5,063,000 ($61/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.
