“There was a
lot of back and
forth in the
negotiations.”
SCOTT SPECTOR
SPECTRUM PARTNERS
made it “extraordinary,” says Spector.
“The process to get the loan assumptions
approved took forever. In terms of the
three properties we purchased with new
debt, we were able to find debt, but it was
a challenging effort.”
Spectrum intends to make varying
degrees of improvements to the properties. Three of the centers are relatively stable and require only re-leasing and minor
remodeling. Four are what Spector terms
“classic turnaround plays,” and need
major re-tenanting.
“Glen Lea had a vacant 35,000-sf Winn
Dixie store, and during the time we were in
due diligence, that space was leased to
Steve & Barry’s. It’s currently under construction and should open in August,” he
explains. “We’re also doing a major renovation of Brafferton, where there was a
vacant Giant Food store. Regency had
leased the space to Sport and Health
Club, the largest such chain in the
Washington, DC area. Their lease had to
be recast for various reasons.”
Meanwhile, Laburnum’s largest tenant,
an Ukrops supermarket, is moving across
the street to a million-sf project being developed by Forest City. Spectrum is working
with Ukrops, which owns its box, to re-ten-ant the space. The most significant project
could potentially be Newark, which is located close to the University of Delaware and
has a significant vacancy, says Spector.
There, the firm is considering the addition of
student housing and residential, as well as
a brand-new tenant mix. That process
could take as long as five years, he
relates.—Sule Aygoren Carranza
letter of credit from PNC Bank in association with Wells Fargo, Chevy Chase Bank
and Virginia Commerce Bank. The paper
also provides funding for tenant improvements and leasing costs.
William S. Asbill, a senior managing
director at HFF, who along with Robert
Donhauser and Cary Abod represented
MBA, says the favorable structure of the
deal reflects the strength of his client.
“This is not the normal real estate finance
vehicle in today’s market, but it’s offered
to companies and associations banks
think highly of and want to do business
with,” he says.
PNC’s AA rating, Asbill relates, greatly
enhances the bond offering. “Bond buyers
are really looking at the rating of the
issuance. And in this case the bank backing it is highly rated.”
The executive anticipates the bonds will
trade near Libor, with an interest rate of
2.5% or 2.6%. “It’s usually five or 10 basis
points on either side, though it varies with
the market,” he says. “With the crazy
credit markets we’ve had in the past few
months, deals have traded as wide as 20
or 30 basis points over Libor.”
Beyond the fluctuating spread, the
credit crunch had minimal affect on the
transaction, Asbill says. MBA was presented with myriad financing options,
notes the executive, but they selected this
one because it was the most cost efficient
and flexible.
“They are basically paying Libor and the
1331 L St.
fee for the letter of credit,” he explains.
The client could also “pay it off at virtually
any time, so if the markets change and
there is better financing available, they
could take advantage of that.”
Located at 1331 L St. in the East End
of the District, the 10-story building was
completed in April. A partnership of the
Paramount Group and DRI Development
Services LLC developed the building,
which is pre-certified LEED Gold for core
and shell and Silver for the interior.
MBA, which moved into the new digs
last month, will initially occupy 65,000 sf.
The building features 170,000 sf of office
space and 11,072 sf of ground-floor
retail. According to Asbill, the MBA is currently negotiating leases for the remaining
space.—Danielle Douglas
Reprint orders: www.remreprints.com
Enter code F07084
Finance: Did You Know?
finance
MBA BUYS HEADQUARTERS
WITH $75M LOAN FROM HFF
Washington, DC—Thanks to a $75-mil-
lion funding pact from Holliday Fenoglio
Fowler LP, the Mortgage Bankers
Association now owns the 181,072-sf
building where its headquarters resides.
The acquisition financing was structured as a variable-rate, 30-year taxable
bond transaction, which will be marketed
by PNC Capital Markets. It is backed by a
New York City-based Savanna has acquired the $157.7-million C-note on the first mortgage of a 1.4-million-sf
office portfolio in Rosslyn, VA. The real estate investment and development fund purchased an interest in the $567-
million paper at a discount to par value from an unnamed investment bank. Monday Properties owns and manages the portfolio, which is comprised of three class A office towers. Together the properties are 98% leased…
For the development of a 102-key hotel in Wichita, KS, RockBridge Capital LLC has secured a $10.1-million first
mortgage. The SpringHill Suites, a Marriott franchise, will be owned and operated by A.G. Holdings, the borrower.
Construction on the property began in May, with delivery targeted for a year later…With a $22.5-million construction loan from CIT Group Inc., the Northern Arapaho Tribe has completed the Wind River casino in Riverton,
WY. Terms of the deal were not disclosed. The
45,000-sf casino, which opened last month, features more than 700 gaming machines, eight table
games, restaurants and an entertainment area for
live performances…A 13-property office portfolio in
Louisville, KY now backs a $109.5-million loan funded
by GE Real Estate. The on-book, fixed-rate paper has
a three-year term. Fenley Real Estate will use the
debt to refinance and recapitalize the assets. The portfolio, totaling over 900,000 sf of class A and B space,
SpringHill Suites is currently 88% leased to some 100 tenants. CB
Richard Ellis brokered the deal for the borrower…On
behalf of Behringer Harvard Opportunity Real Estate Investment Trust I Inc., Behringer Harvard has closed on a
$75-million secured credit facility. The financing will be used for the ongoing acquisition, capital improvement
and development activities of the REIT. The facility may be increased up to $150 million upon satisfaction of certain conditions, including additions to the collateral pool. Bank of America Securities acted as the lead arranger,
while Fifth Third Bank and BMO Capital Markets Financing Inc. served as co-lenders.
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