out to our clients.
NEW YORK CITY-Locally based Centerline Capital Group says moving back into the CMBS loan market gives it a much broader offering. The firm closed on its first deal this week, a $2.7-million loan used for the acquisition of a 14,564-square-foot single-tenant building in Findlay, OH. “We now have a net to cast out to our clients,” says Vic Clark, Centerline’s managing director. “We’re not specifically focused on multifamily. We can do office, retail, industrial and hotels. It infinitely increases our reach into commercial real estate.”
Clark says Centerline also gains more flexibility with CMBS. “Lets say I’m looking at a multifamily deal and, for whatever reason, it can’t get done in Fannie Mae, Freddie Mac or HUD. CMBS is the fourth alternative.
He notes that the deal was put together in about 65 days. It originally included two Rite Aid stores, but the buyer chose not to purchase one, slowing the process. Typically, a deal will take about 45 days, he says.
“Any single-tenant deal can be challenging,” Clark says. “If something happens to a tenant, a credit downgrade, you don’t have any rent. That’s what presents a challenge to the CMBS world. You have to have the right deal and we’re pretty good about figuring out what the right deals are.”
The property is 100% occupied by a Rite Aid drugstore that includes a drive-through pharmacy, one-hour photo processing, a food mart and a GNC Live Well Store. The borrower is a newly formed, single-purpose entity. Ryan Porter of Cohen Financial brought the deal to Centerline.
Clark says Centerline did its due diligence on the Ohio deal and found it met all of its loan requirements, including a great location and a long-term lease (through August 2027, nearly five years past the end of the loan term) in place. The long-term lease also includes four five-year renewal options at the end of the initial lease term, and includes a corporate guarantee by Rite Aid Corp.
“When we decided to go into the CMBS business, we decided to try to do deals of $2.5 million and above,” Clark says. “A number of CMBS shops won’t go below $5 million.”
Centerline plans a national focus on CMBS loans in both primary and secondary markets. Clarks says the company hopes to close three more loans in the next two weeks, including a multifamily deal in Dallas.
“It’s a big step for Centerline to get back into the CMBS business and we’re extremely excited,” Clark says. “There’s going to be an enormous amount of rollover in markets during the next five years, and we’ll need as much CMBS money as we can muster. We’ll put the resources behind it.”