Source: CoStar Group

Non-Recourse Loan to Cover Major Capital Improvements, Razing of Former Kmart Location and Development of Two New Bldgs. at Florence Square

Triangle Capital Group, Arcadian Secure $15 Million in Financing for Florence Shopping Center

Non-Recourse Loan to Cover Major Capital Improvements, Razing of Former Kmart Location and Development of Two New Bldgs. at Florence Square

By Cory Guy

December 15, 2016

Triangle Capital Group and Arcadian Cap Group secured $15.25 million in financing to be used towards extensive capital improvements to Florence Square, a 633-square-foot, T.J. Maxx-anchored shopping center located at 111-191 Cox Creek Pky. South in Florence, AL.

Additionally, the loan will cover the demolition of a building formerly occupied by Kmart as well as the development of two new buildings to be occupied by Academy Sports + Outdoors and PetSmart, and the addition of two new outparcels to total 8,000 square feet.

Gregg Applefield, Alex Draganiuk and Jamie Matheny of Mission Capital Advisors' debt and equity finance team arranged the three-year non-recourse loan, which has two one-year extension options.

“Kmart vacated in April of 2016, when its lease expired, and within a few months, the sponsor was able to fill the space with two desirable creditworthy tenants, Academy and PetSmart, which will be new additional anchor tenants for the center,” said Applefield. “The speed with which this re-tenanting took place was a significant factor underlying the competitive terms of the loan, and we were able to structure the deal with aggressive pricing and no recourse except for a lien-free completion guarantee of the new construction.”

Built in 1991, Florence Square is located near the University of North Alabama campus in Florence's main retail corridor and is shadow anchored by a Lowe's and a Walmart Supercenter.

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Written by Mission Capital Asset Sales:

Secondary Market Asset Sales Environment
Liquidity in the secondary market increased substantially following the global financial crisis. High-yield debt funds attempted to raise a record $66.7 billion of equity to invest in high-yield commercial real estate debt in 2016. The $66.7 billion represents 21.5% of all attempted equity raises for investment vehicles in 2016 that invest in commercial properties, debt, or both. That figure represents the highest percentage of total equity raise devoted to high-yield funds since the statistic was first tracked by Real Estate Alert in 2003.This increased liquidity has further legitimized the whole loan trading business. What was once perceived as an avenue for distressed or special situations trading has evolved into a market for transactions occurring in the normal course of business. Motives for divesting assets now stem not only from risk management related to “problem assets,” but also from M&A activity, compliance with internal or regulatory concentration limits, along with a host of other routine portfolio management practices. Price expectations in this ever more liquid market, in conjunction with opportunity-cost for investors evaluating increased product volume, necessitates quality data to bridge the bid-ask gap.

Value-Add of Due Diligence
As the secondary market for whole loans continues to mature, the role data plays in facilitating timely transactions at market-clearing prices has become increasingly important. Banks, funds, servicers, and other lenders exploring the sale of assets may be penalized for incomplete data by investors making conservative assumptions to protect against downside. Servicing systems, designed primarily to manage loan administration rather than facilitate asset management, are inherently limited in their ability to supply the robust data needed to effectuate a loan sale. These systems often fail to memorialize collateral release and / or addition, relevant borrower and guarantor detail, along with other pertinent information for underwriting a loan. Additionally, over the life of a loan data may be “lost” due to servicing conversions, loan modifications, or hosting on legacy systems. Data pitfalls don’t end with the servicing system; further compounding data inadequacies are factors including regulatory changes requiring increased disclosures for compliance, document exceptions, and the dilemma of covenant checks where lenders are often dis-incentivized from confirming compliance (non-compliance necessitates a downgrade, whereas no action is required otherwise). Sellers are often tempted to market assets without first packaging diligence under the rationale that reducing time to market will increase interest and minimize externalities.  This is often done at the risk of impacting pricing and actual transaction timing. Responding to investor data requests during the course of a transaction diverts resources that are better focused on the marketing effort. Surprises, such as missing documents and lien issues, may be more difficult to cure during the course of a transaction and could even result in pricing adjustment or closing delays. Conversely, getting in front of diligence issues typically leads to stronger execution from a time and price perspective.

Mission Capital’s Answer: Secondary Market Surveillance
Providing a succinct diligence package can seem like an arduous task, but doing so in advance of a transaction invariably pays off in the long term. Aggregating data from various systems and obtaining documents from numerous sources, including custodians, file vaults, asset managers, and outside counsel, in itself can be a challenge. Once data and files have been gathered from disparate sources, organizing this information into a succinct diligence package often appears a monumental undertaking. Mission Capital has solved for this challenge through our proprietary due diligence platform, Secondary Market Surveillance (“SMS”). The SMS platform provides permission-based portal access for all stakeholders in the loan evaluation process, streamlining due diligence by serving as a single repository for data management. SMS is constructed on relational database technology, which allows seamless underwriting and analysis of multi-loan asset relationships as well as loans with numerous collateral items and borrower / guarantors. Real time reporting is available through customized dashboards and data extracts. Banks, servicers, and funds that have leveraged SMS to perform due diligence in advance of a loan sale have uncovered real value through the process. By utilizing SMS, Mission Capital was able to determine that a significant portion of a client’s non-performing loan portfolio slated for sale was nearing the statute of limitations for initiating legal action. Asset managers and third party counsel accessed SMS reports to determine which loans were in question, and either initiated legal proceedings or structured a sale such that closing would occur prior to the end of the statutory period. SMS is equally useful for uncovering value with performing loans. When underwriting a re-performing loan pool in SMS it was discovered that the lender frequently took additional collateral as part of loan restructuring. Robust data tapes extracted from SMS reflected nearly 20% more collateral than had been reported in the client’s initial servicing tape. Another due diligence project involving a portfolio of seasoned performing loans revealed that the risk profile of the portfolio had declined since origination, allowing the lender to present a data tape featuring improved property occupancy and NOI relative to that which had been reflected in the servicing tape. Increasingly competitive markets favor good data and rapid transactions. Robust data tapes allow investors to quickly and accurately price portfolios, while arming sellers with rebuttals to potential concerns that arise during the course of investor due diligence. Utilizing a diligence platform could mean the difference between a smooth transaction which meets deadlines and achieves strong bids, and a drawn out, resource intensive trade or dreaded “no-trade”.

To learn more about Mission Capital’s Due Diligence services and SMS platform please click here.

Source: New York Real Estate Journal
Shown (from left) are: Joe Runk, Mission Capital; Dwight Bostic, Mission Capital; Dennis Zenhle, Mission Global; and Trenton Stanley, Mission Global

Mission Capital Advisors, a national, diversified advisory and brokerage firm that specializes in arranging real estate capital, held its annual holiday bash at the Top of the Standard.   Read the full story here. [Download PDF of story]

IN PICTURES: Mission Capital holds its holiday party

BY REW • DECEMBER 21, 2016

Mission Capital Advisors, a national, diversified advisory and brokerage firm that specializes in arranging real estate capital, held its annual holiday bash at the Top of the Standard.

Photos by Jesse Hsu Photography.

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We here at Mission Capital Advisors are pretty certain our annual holiday party is the best holiday party in town for our fellow RE professionals. Browse through our pictures and see why.

 

See the entire holiday party album [here]

 

 

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Source: Wall Street Journal

Firm is hired to sell mortgage of former UBS office complex in Connecticut; sale expected at cut rate

MARKETS | PROPERTY REPORT

World’s Largest Trading Floor Put on the Block

Firm is hired to sell mortgage of former UBS office complex in

Connecticut; sale expected at cut rate

By PETER GRANT

Updated Dec. 20, 2016 11:03 a.m. ET

For sale cheap: the world’s largest trading floor.
The property was part of a lavish development in Stamford, Conn., in the 1990s designed to lure what was then Swiss Bank Corp. and thousands of workers away from New York.
Soaring 40 feet high, the trading floor was bigger than a football field, unimpeded by columns and soon filled with hundreds of stock, bond and currency traders.
Now the office complex and its once-iconic trading floor are both mostly empty and up for grabs.
CW Capital Asset Management, the servicer that controls the $149.4 million mortgage on the
712,000-square-foot complex near the Stamford train station, has hired Mission Capital Advisors
to put the debt on the block, according to people familiar with the matter.
The mortgage is widely expected to sell for well under that amount, given that the property has been vacated by its tenant, UBS Group AG.
UBS merged with Swiss Bank in the late 1990s but has shrunk its Stamford operations in recent years.
The Stamford office market, meanwhile, is suffering one of the highest vacancy rates in the U.S., at more than 30%.
“If you look at the amount of tenants coming into this market versus the overhang of space, you would see it’s going to take many, many years to lease all the large blocks up,” said David Block, a senior vice president in the Stamford office of real-estate services giant CBRE

Group Inc.

Real-estate industry executives predict that whoever buys the mortgage will soon become owner of the complex at 677 Washington Boulevard. The complex currently is controlled by AVG Partners, a Beverly Hills, Calif., investment firm, according to a person familiar with the matter. The property’s owner defaulted on the mortgage in October when it was due to be repaid, according to Trepp LLC, a data firm that tracks the commercial real-estate debt market.
AVG Partners didn’t return requests for comment.
The empty trading floor has become a symbol of the end of a freewheeling era on Wall Street in which banks and hedge funds made vast sums buying and selling securities. The financial crisis prompted a wave of regulation making it more difficult for banks to trade their own capital. Hedge funds, meanwhile, retrenched.
The saga also spotlights the double-whammy that has hit the Stamford office market in recent years. First, urban downtowns like New York, with their young and creative workforces, have become more attractive to employers than suburbs and satellite cities like Stamford.
At the same time, the contraction of the financial-services industry has hit two of Stamford’s biggest employers: UBS and Royal Bank of Scotland Group PLC.
UBS moved its Stamford operations out of 677 Washington mostly to space nearby that had formerly housed RBS, which also has shrunk its presence in the area. UBS reported last year that its Connecticut staff had dropped by 500 to roughly 2,000 employees, compared with 5,000 five years ago.
The picture was a lot rosier in 1994 when the state of Connecticut lured Swiss Bank to Stamford partly by offering $120 million in tax credits. Back then, with Rudolph Giuliani just starting his
first term as New York City mayor, businesses were leaving New York and Stamford was dreaming of becoming a new financial center.
But Stamford has been struggling ever since the 2008 financial crash, even as New York has rebounded. In 2011, when UBS was eyeing a move back into Manhattan, Connecticut gave the firm a $20 million incentive package to stay.
State officials and landlords are hopeful the incoming Trump administration will stoke expansion in financial services. They also pointed out that smaller financial-services companies continue to thrive in the area.
“Having your back office in Connecticut isn’t as important a move as it used to be,”
said Catherine Smith, who heads the state’s Department of Economic and Community Development. “But we’re still seeing quite a bit of demand from hedge funds, private-equity firms and the insurance industry.”
What does one do with a trading floor that has expanded over the years to about 100,000 square feet? Suggestions have ranged from the whimsical—like a roller derby rink—to the more prosaic, like call centers.
Ms. Smith suggested the floor could be converted into a film or television studio. “A lot of television has come out of New York into Stamford,” she said.
The mortgage on 677 Washington was made in 2004 and converted into commercial mortgage- backed securities. Its sale will likely mean big losses for some of the bondholders because of the low value of the property.
Last year, the vacant former Pitney Bowes headquarters in Stamford sold for close to $40 million, or roughly $90 a square foot. At that rate, 677 Washington would be worth about $65 million.

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Mission Capital announced that its Debt & Equity Finance team arranged a $15.25-million, non-recourse loan for Florence Square, a 226,886-square-foot shopping center located on the main retail corridor of Florence, AL.

Media Contact: Shlomo Morgulis Beckerman

smorgulis@beckermanpr.com

201-­‐465-­‐8007

Mission Capital Arranges $15.25 Million Loan For Alabama Shopping Center

 

Financing Will Allow for Construction of Two New Buildings on Premises

FLORENCE, Ala. (Dec. 13, 2016) — Mission Capital Advisors today announced that its Debt & Equity Finance team arranged a $15.25-­‐million, non-­‐recourse loan for Florence Square, a 226,886-­‐square-­‐foot shopping center located on the main retail corridor of Florence, Alabama.

The loan, which closed on December 9, will cover major capital improvements, including the demolition of a building that was previously occupied and recently vacated by Kmart upon expiration of its lease; the construction of two brand new buildings that will be occupied by Academy Sports + Outdoors and PetSmart; and the development of two new additional outparcels, which will add another 8,000 square feet.

The Mission Capital team of Gregg Applefield, Alex Draganiuk, and Jamie Matheny secured the loan on behalf of the sponsor, a joint venture between Triangle Capital Group and Arcadian Cap Group, LLC, which acquired the property in 2014. In addition to significant capital improvements and additional inline new and renewal leasing, this financing will enable the sponsor to pay off the property’s existing low-­‐leverage CMBS loan.

“Kmart vacated in April of 2016, when its lease expired, and within a few months, the sponsor was able to fill the space with two desirable creditworthy tenants, Academy and Petsmart, which will be new additional anchor tenants for the center,” said Applefield. “The speed with which this re-­‐tenanting took place was a significant factor underlying the competitive terms of the loan, and we were able to structure the deal with aggressive pricing and no recourse except for a lien-­‐free completion guarantee of the new construction.”

The lender provided a three year-­‐loan with two one-­‐year extension options.

“It was critical to convey the immediate competitive advantages of the location, which is in a tertiary market, but is anchored by a T.J.Maxx, and is immediately shadow anchored by a Lowe’s and a Walmart Supercenter,” noted Draganiuk. “Florence is also the home of the University of North Alabama, which provides a solid and consistent base of shoppers, and the center is located in the heart of the Florence retail corridor.”

This is Mission Capital’s fourth deal with Triangle Capital Group, and its second at Florence Square.

Launched in early 2009, Triangle Capital Group is an investment management firm that specializes in diversified real estate investments and related strategies. Arcadian Cap Group, LLC is a private real estate firm focusing on opportunistic real estate investments.

Mission Capital Advisors is extremely active in arranging financing for industrial, office, hotel, multifamily, retail, and self-­storage properties across the country. The firm’s recent deals include arranging a $13.25-­‐million loan for a mixed-­‐use portfolio in Charleston, South Carolina, and securing $19.3 million in financing for eight industrial properties in Chicago.

About Mission Capital Advisors

Founded in 2002, Mission Capital Advisors, LLC is a leading national, diversified advisory and brokerage firm that specializes in arranging real estate capital, with offices in New York City, Florida, Texas, California, and Raleigh, North Carolina. The firm delivers value to its clients through an integrated platform of advisory and transaction management services across debt, mezzanine, and JV equity placement; commercial and residential loan sales; and loan portfolio valuation. Since its inception, Mission Capital has advised a variety of leading financial institutions and real estate investors on more than $65 billion of financing and loan sale transactions, as well as in excess of $14 billion of Fannie Mae and Freddie Mac transactions, positioning the firm strongly to provide unmatched loan portfolio valuation services for both commercial and residential assets. Mission Capital’s seasoned team of industry-­‐leading professionals is committed to achieving clients’ business objectives while maintaining the highest levels of integrity and trust. For more information, visit www.www.missioncap.com.

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