abandoned because of corporate mergers and restructurings.
Zucker’s vision of the property as a “metroburb,” a new kind of
business campus that could simulate the urban downtown experience in the iconic building, excited bankers enough that the
project received $70 million in redevelopment financing from
Investors Bank, OceanFirst Bank, and Meridian Capital Group.
Investors Bank EVP and chief lending officer Rich Spengler
was impressed by Somerset Development’s plans for the site.
The partnership worked closely with longtime Somerset
Development CFO Bill Schroeder, negotiating an arrangement that
asked for the equity up front, leveraged the asset appropriately, and
negotiated a letter of credit that will stand behind the building for
the 36 months of the loan. Combined with a $32 million
historical tax credit arranged through PNC Bank, Bell
Works secured a total of $102 million in financing in 2017.
ELMTREE NETS CHINESE FUNDS FOR RECAP
ElmTree Funds, a private equity real estate investment
fund, has recapitalized its net lease portfolio to the tune of
$950 million with China Life Insurance Group. It’s China
Life’s first joint venture with Elm Tree, which specializes in
net lease, sale-leaseback and build-to-suit markets.
The JV portfolio initially comprises 48 single-tenant
properties totaling more than 5. 5 million sf across 20
states. The agreement between the insurer and Elm Tree
provides for the acquisition of two additional single-tenant net lease properties from Elm Tree Net Lease Fund II,
which closed at $325 million in May 2014.
Most of the assets in the portfolio are recently constructed BTS
properties, primarily leased to investment grade tenants and situated in secondary and tertiary markets with strong long-term
economic and demographic fundamentals. ElmTree will continue to serve as asset manager of the portfolio and employ a
core/core-plus investment strategy. Hodes Weill Securities acted
as exclusive financial advisor to Elm Tree.
REINVENTING BOCA RATON
Just days after Hurricane Irma, Faisal Ashraf and his one-year-old
real estate investment bank, Lotus Capital Partners, orchestrated
Florida’s largest debt deal of the year—a multi-faceted $318 million loan from Mack Real Estate Group for Penn-Florida’s Via
Mizner and Mandarin Oriental, Boca Raton.
Via Mizner is a two-million square-foot mixed-use project that will
feature an already-built and rapidly stabilizing 366-unit luxury apartment building, 88 Mandarin Oriental condominiums, 60,000 sf of
upscale retail, and a 164-key Mandarin Oriental Hotel & Resort.
South Florida is challenging for raising CRE debt right now, especially for condominium and hotel construction. After a bull run
lasting eight years, local lenders are tapped out. With repayments on
outstanding loans coming in slower than new loan requests, any loan
request above $50 million can easily be a non-starter.
The sponsor’s goal was maximum flexibility in creating a complex
piece of financing that involves three interlocking phases, each at a
different level of completion and risk profile. They consisted of: a
$175 million refinancing of a development loan on the luxury apartment building at a basis of 80% and a per-key rate of $480,000, making it among the highest ever financed in South Florida; a $115-mil-
lion construction loan for the new hotel, among the highest
construction loan basis ever written for South Florida hospitality at
$700,000 per key; and a $20-million bridge loan, at $10.5 million an
acre, for the adjacent land, where the condos will be developed as
the third and final phase.
Existing EB5 financing created further complexity. Lotus
rewired the pre-existing EB5 equity, initially spread across all three
phases and converted it to EB5 debt, while ensuring the structures
work with Mack. This allowed for a newly tailored capital structure
of nearly $400 million.
The deal’s most noteworthy facet is that it enabled a city-trans-forming project to persevere. Via Mizner will reshape Boca
Raton’s future, transforming it from an enclave of wealthy gated
communities into a vibrant travel destination for millennials and
a home for young professionals.
Lotus’ pitch to Penn Florida was that, despite its size and newcomer status, it has decades-old relationships with decision-makers at
numerous large New York-based institutions, including those with
the capacity and appetite to write notes on mega-projects. Peter
Sotoloff, Mack’s chief investment officer and managing partner, says
Lotus was able to evaluate and identify lenders who understood the
project’s complexities. Not only was this the biggest financing of the
year in South Florida, but one of the state’s largest ever.
REALIZING AN AMERICAN DREAM
For most investment bankers, bringing a $1.6 billion financing
deal to fruition is truly an American dream, but it’s even more
fitting when the project’s name is American Dream, a long-awaited entertainment and retail center in the Meadowlands
sports complex in Secaucus, NJ.
Triple Five Group of Cos. revived its stalled American Dream
Meadowlands project when it closed on $1.67 billion in private
construction financing last year. The private debt was later combined with an offering of $1.1 billion in tax-exempt bonds, led by
Goldman Sachs and issued through the New Jersey Sports and
Exposition Authority. Collectively, the funds allowed the developer to “aggressively move forward” with its construction plans,
which had slowed over the past few years the financing arena
became more challenging for development projects.
J.P. Morgan led the origination of the construction debt, com-prised of a $1.195-billion senior loan and $475 million in mezzanine funds from AllianceBernstein. The mezz lender was counseled in the talks by Fried Frank partners Mechanic, Avi Feinberg,
Rebecca Zelenka and Michelle Gold, along with the firm’s
Stephanie Spell, Daniel Daneshrad, Shreyas Jhaveri and Rita Muir.
The law firm of Skadden represented JPMorgan in the debt
origination. Led by partners Marco Caffuzzi and Audrey Sokoloff,
Skadden handled the syndication of the senior construction loan
to a consortium of senior lenders, the sale of the mezzanine construction loan to a consortium of mezzanine lenders, negotiation
of complex intercreditor arrangements between the senior and