mezzanine lenders, and representation of the senior lenders in
connection with intercreditor arrangements with the trustee under
a $800 million payment-in-lieu-of-taxes (PILOT) bond financing.
After the construction financing, in June 2017, Goldman Sachs
and JPMorgan completed the planned sale of $1.1 billion in tax-exempt bonds for the project. Proceeds from the bond sale,
along with the previously closed construction loan, completed
the full financing for the project.
12 ASSETS CASH OUT AFTER 12 MONTHS
CBRE vice chairman Brian Eisendrath used a floating rate refinance that incorporated a second floating loan to help the owner
of a 12-property portfolio reduce its spread, extend its interest
term, and increase proceeds. It’s a rare structure Eisendrath and
his team have pioneered in the market that can lower borrowing
costs, increase cash flow, and enable investors to hold property
longer, to benefit from the carried-interest hold period.
In this case, Eisendrath had led the original financing in April
2016 when the borrower purchased a 15-property portfolio. The
refinancing totaled $459 million.
Knowing that lender spreads were compressing, Eisendrath
proposed that the client extend its interest-only term while simultaneously reducing its spread and increasing proceeds. He negotiated a spread more than 30 basis points tighter than the existing
cost, and meticulously reviewed each property’s financial statement to find other opportunities to improve proceeds.
It was rare that a floating rate loan refinance allowed the client
to cash out on the portfolio. The spread was reduced by 13%, and
proceeds increased by 12%, giving the borrower three additional
years of interest only. This structure permitted successful execution of the borrower’s business plan and the client continued
refinancing existing floating rate loans to extend terms, repatriate capital and improve cash flow.
A MISSION FOR 1500 MISSION STREET
Located where three of San Francisco’s iconic neighborhoods—
SOMA, The Mission and Hayes Valley—meet, 1500 Mission Street
blocks away from the headquarters of Twitter, Uber and Square, City
Hall, Davies Symphony Hall and the San Francisco Jazz Center.
Transforming it into a completely new 39-story mixed-income,
mixed-use development with luxury
apartments, offices, retail, municipal
offices, and affordable and low-income housing required structuring
California’s largest ever multifamily
tax-exempt mortgage revenue bond.
The $316.8 million issue financed
construction costs for the project’s
The tax-exempt mortgage revenue bond and the balance of the
financing, $141.7 million of variable
demand notes, has been purchased
by Deutsche Bank. The unprecedented size of the investment represents the final milestone for the
development and clearly demonstrates developer Related California’s
commitment and knowledge of
leveraging public-private partnerships throughout the state.
Rising 39 stories, this mixed-income, mixed-use development
will consist of a 540-unit luxury apartment tower adjacent to a
462,000-sf office building that will be the new home of the San
Francisco Planning, Building and Public Works Departments.
The residential tower will include 55,000 sf of neighborhood serving retail with twenty% of the residential units for affordable and
The build-to-suit office building is being financed by the City and
County of San Francisco with proceeds from the sale of three city-owned buildings along with commercial paper. This new, modern
and efficient office building will be a ‘one-stop shop’ for their department of public works, planning department and department of
building inspection, and be constructed at a far lower cost than
would have been realistic had it pursued ground up construction.
Related purchased the existing building from Goodwill
Industries in 2014 for $65 million, providing the 116-year-old
nonprofit organization with an endowment to help sustain itself
for the next 100 years, including relocating its offices to the
northern edge of the City’s Tenderloin District, to be closer to the
population it serves. During pre-development and the approval
process of the mixed-use development, Related began seeking
construction financing and ultimately prevailed by leveraging tax-exempt bonds at this paramount scale.
This transformative development was promoted by San
Francisco Mayor Ed Lee, who died suddenly in December 2017.
Site demolition began in November 2017. Construction is
expected to take 28 months with completion slated in May 2020.
Key executives on the project are Gino Canori, Related California
residential executive vice president, and Matthew Witte, Related
California residential project executive.
HUNT VENTURES INTO CLOS
In its first venture into the CLO market, Hunt Mortgage Group
financed $350 million in floating rate bridge loans, with about
$291 million of investment-grade notes sold to 15 institutional
investors, according to Mike Becktel, managing director.
The company retained the first loss non-investment grade piece
of just under 17%. The CLO provides for a replenishment period
for primarily multifamily assets, giving the asset manager, Hunt
Investment Management, the ability to replace collateral with
qualifying hunt mortgage
group loans as existing deals
mature or pay-off. The $280
million transaction is backed by
23 loans on 36 properties. The
largest is a $33.8 million mortgage on a portfolio of five
apartment buildings in
Abilene, TX. The owner is making improvements to the units,
including repainted cabinets
and countertops, installing
appliance packages and
The transitional loans —
also known as bridge loans —
have traditionally been kept on
balance sheet. But with interest
rates headed higher and the
multifamily market still going
strong, it has become attractive