This week, CRED iQ reviewed the commercial real estate lending landscape and highlighted 5 properties that have secured financing in February 2022. The highlighted loan originations cover several property types (retail, mixed use, and multifamily), giving a broad range of financing deals that have been completed across a range of MSAs such as Detroit, Kansas City, Cleveland and Los Angeles.
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.
Midtown Square
580,251 sf, Power Center, Troy, MI
An $80.4 million loan was originated by Morgan Stanley on February 14, 2022 to refinance existing debt on a power center in Troy, MI, located about 18 miles outside of Detroit. Part of the proceeds from the new origination, totaling approximately $20 million, were used to fund a guarantor reserve due to the absence of a non-recourse carveout guarantor. The guarantor reserve funds may be released after an acceptable guarantor is put into place. The 10-year loan was structured with an interest rate of 4.00% and an initial two-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 until its open period, 5 months prior to maturity.
Using CRED iQ’s Comps functionality, the closest comparable origination was a two-property portfolio loan secured in part by The Forum At Gateways retail center in Sterling Heights, MI. The loan was originated in September 2019 and had an interest rate of 3.94%. The Forum At Gateways is anchored by a Walmart and an LA Fitness. Of note, the comparable loan has been in special servicing since July 2020.
Midtown Square is anchored by Home Depot, Target, Kohl’s, and Kroger. Altogether, the four anchors account for 77% of the property’s NRA. Home Depot and Target have scheduled lease expirations in January 2026 and the Kohl’s lease expires in January 2027. However, all three tenants have several multi-year extension options. The property was 99% occupied as of January 2022 and was appraised at a value of $127.8 million ($220/sf) as of December 2, 2021. The appraisal resulted in an LTV of 63%, and an implied cap rate of 5.58% based on the originator’s underwritten NCF. The debt yield came in at 8.9%, also based on NCF from the originator’s underwriting. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Midtown Square |
| Address | 1237 Coolidge Highway Troy, MI 48084 |
| Property Type | Retail |
| Propety Subtype | Power Center |
| Building Size | 580,251 sf |
| Year Built | 2000 |
| Submarket | Troy South |
| County | Oakland |
| MSA | Detroit-Warren-Livonia, MI |
| Origination Date | 2/14/2022 |
| Loan Amount | $80,430,000 |
| Interest Rate | 4.00% |
| Valuation | |
| Appraised Value | $127,800,000 ($220/sf) |
| Appraisal Date | 12/2/2021 |
| Appraisal LTV | 62.9% |
| CRED iQ Base-Case Value | $116,300,000 ($200/sf) |
Cimarron Apartments
191 units, Multifamily, Independence, MO
In addition to CMBS, Freddie Mac, and Ginnie Mae, CRED iQ also offers data from loans contributed to Fannie Mae securitizations. Greystone Servicing Company originated a $19.7 million Fannie Mae mortgage on February 7, 2022. The loan was structured with a 12-year term and had an interest rate of 3.96%. The loan has an initial 3-year interest-only period followed by a 30-year amortization schedule. CRED iQ’s highest scoring loan comp was a $6.8 million mortgage secured by Blue Valley Court Townhomes, a 165-unit multifamily property located 2 miles away in Kansas City, MO. The comparable loan was originated in March 2020 and had an interest rate of 3.64%. Cimarron Apartments appraised for $26.5 million, equal to $138,743/unit, as of January 11, 2022, which resulted in an LTV of 74.3% and implied a cap rate of 5.30%. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Cimarron Apartments |
| Address | 525 Stone Arch Drive Independence, MO 64052 |
| Property Type | Multifamily |
| Propety Subtype | Townhome |
| Building Size | 191 units |
| Year Built | 1940 |
| Submarket | East Kansas City |
| County | Jackson |
| MSA | Kansas City, MO-KS |
| Origination Date | 2/7/2022 |
| Loan Amount | $19,697,000 |
| Interest Rate | 3.96% |
| Valuation | |
| Appraised Value | $26,5000,000 ($138,743/unit) |
| Appraisal Date | 1/11/2022 |
| Appraisal LTV | 74.3% |
| CRED iQ Base-Case Value | $24,590,000 ($128,757/unit) |
Crocker Park (Phase 3)
110,352 sf, Retail, Westlake, OH
Stark Properties secured $19.5 million in mortgage debt from JP Morgan on February 4, 2021 to refinance existing debt on Phase 3 of Crocker Park, an open-air lifestyle center and mixed-use development located in Westlake, OH. The loan is structured with a 10-year term and amortizes over a 30-year schedule. The interest rate is 4.536%, which is comparatively higher than other recent originations secured by retail. The loan will be locked out from prepayment for about 2 years, and defeasance will be permitted after lockout through the remainder of the loan term until its open period, 6 months prior to maturity. Phase One and Phase Two of the Crocker Park development were previously encumbered by a $140 million mortgage that was originated in July 2016 and had an interest rate of 4.92%.
Phase 3 of Crocker Park features a town center layout with ground-floor retail below three to four-story residential components. Only the ground-floor retail components serve as collateral for the recent origination. The largest tenants are H&M (21% of the NRA), Cost Plus World Market (17% of the NRA), and buybuyBaby (13% of the NRA). Cost Plus World Market was formerly a subsidiary of Bed Bath & Beyond while buybuyBaby still is. Both tenants’ leases are scheduled to expire in 2037; however, Bed Bath & Beyond and associated retailers have exhibited willingness to close stores as part of operational efficiency assessments. CRED iQ identified examples of such closures in our January 18, 2022 WAR Report. Credit risk from the property’s primary tenants will be an ongoing concern throughout the loan’s term.
The Phase 3 retail portion of the property was appraised for $31.7 million, equal to $287/sf, as of October 21, 2021, which resulted in an LTV of 61%. The originator’s underwritten net cash flow equated to a debt yield of 9.5% and implied a cap rate of 5.84%. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Crocker Park (Phase 3) |
| Address | 177 Market Street Westlake, OH 44145 |
| Property Type | Retail |
| Propety Subtype | Lifestyle Center |
| Building Size | 110,352 sf |
| Year Built | 2015 |
| Submarket | West |
| County | Cuyahoga |
| MSA | Cleveland-Elyria-Mentor OH |
| Origination Date | 2/4/2022 |
| Loan Amount | $19,500,000 |
| Interest Rate | 4.54% |
| Valuation | |
| Appraised Value | $31,700,000 ($287/sf) |
| Appraisal Date | 10/21/2021 |
| Appraisal LTV | 61.4% |
| CRED iQ Base-Case Value | $30,040,000 ($272/sf) |
Covina Palms Business Center
71,925-sf, Mixed Use (Medical Office/Retail), West Covina, CA
Bank of America funded an $11.2 million mortgage on February 11, 2022 to refinance existing debt on the Covina Palms Business Center in West Covina, CA. The interest-only loan has a 10-year term and an interest rate of 3.71%. The loan will be locked out from prepayment for 2 years, and then require a yield maintenance charge for prepayment until its open period 5 months prior to maturity in March 2032. Two of CRED iQ’s highest scoring property comps are part of a 14-property Southern California retail portfolio that secures a $214.8 million loan. The portfolio loan secured by the comparable properties, which had an interest-only structure, was originated by Argentic Real Estate Finance in April 2019 and had an interest rate of 4.06%.
The Covina Palms Business Center has the typical layout of a retail community center; however, multiple primary tenants use the space as medical offices. CRED iQ recently provided analysis on the inclusion of mixed-use collateral in CMBS and featured the various combinations of property uses including retail properties with office components such as the Covina Palms Business Center. The largest tenant, 27% of the NRA, operates as a dental practitioner. The property appraised for $22.5 million, equal to $313/sf, as of October 27, 2021, which resulted in an LTV of 50% and implied a cap rate of 5.23% based on the originator’s underwritten net cash flow. The loan also had a debt yield of 10.5% based on the originator’s underwritten net cash flow. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Covina Palms Business Center |
| Address | 2211 East Garvey Avenue West Covina, CA 91791 |
| Property Type | Mixed Use |
| Propety Subtype | Medical Office/Retail |
| Building Size | 71,925 sf |
| Year Built | 1989 |
| Submarket | Covina |
| County | Los Angeles |
| MSA | Los Angeles-Long Beach-Santa Ana, CA |
| Origination Date | 2/14/2022 |
| Loan Amount | $11,225,000 |
| Interest Rate | 3.71% |
| Valuation | |
| Appraised Value | $22,500,000 ($313/sf) |
| Appraisal Date | 10/27/2021 |
| Appraisal LTV | 49.9% |
| CRED iQ Base-Case Value | $21,610,000 ($300/sf) |
Hampton Inn Texarkana
89 keys, Limited-Service Hotel, Texarkana, AR
A recent example of the lodging sector’s recovery is JP Morgan’s origination of a $5.8 million mortgage on February 3, 2022 to refinance existing debt on a hotel located along the Texas-Arkansas border in Texarkana, AR. The loan has a 10-year term and is structured to amortize on a 30-year schedule. The loan’s interest rate is 5.308% and its maturity date is in March 2032. The hotel’s franchise agreement with Hampton Inn expires in August 2031.
CRED iQ’s comp set for the Hampton Inn Texarkana is the Holiday Inn Express & Suites Texarkana East, which is part of a Starwood Capital Group portfolio of 65 hotels that secure a $577.3 million mortgage. The Hampton Inn is adjacent to the Holiday Inn Express and competes with more than 10 other lodging properties located off the exit of Interstate 30 along the state borders. The property received an appraisal equal to $8.9 million, or $100,000 per key, as of December 1, 2021 based on an expected market value assuming the completion of a property improvement plan. The LTV based on the appraisal assuming the completion of the property improvement plan is 65% with an implied cap rate of 7.65%. For the full valuation report and loan-level details, click here.
| Subject Property | |
| Name | Hampton Inn Texarkana |
| Address | 5302 Crossroads Parkway Texarkana, AR 71854 |
| Property Type | Hospitality |
| Propety Subtype | Limited Service |
| Building Size | 89 keys |
| Year Built | 2013 |
| Submarket | Texarkana |
| County | Miller |
| MSA | Texarkana, TX-Texarkana, AR |
| Origination Date | 2/3/2022 |
| Loan Amount | $5,785,000 |
| Interest Rate | 5.31% |
| Valuation | |
| Appraised Value | $8,900,000 ($100,000/key) |
| Appraisal Date | 12/1/2021 |
| Appraisal LTV | 65.0% |
| CRED iQ Base-Case Value | $7,745,000 ($87,027/key) |
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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.
