AUSTIN-Christopher Commercial Inc. obtained $33 million to refinance its purchase of the 357,168-square-foot Shops at Arbor Trails for one reason: the rock-bottom interest rates. The local commercial real estate owner acquired the property at 4301 W. William Cannon Dr. from the developer in 2008, two years before its 2010 completion, relying on a line of credit to secure the asset.
“That had been a somewhat creative purchase, and using the credit helped them beat out some more well-known, institutional buyers,” says HFF senior managing director Doug Opalka. Opalka and HFF real estate analyst Patrick McCord secured financing on behalf of the sponsor from Principal Real Estate Investors, financing that will pay down the credit line.
Opalka tells GlobeSt.com that Christopher Commercial is a long-term holder and with lower interest rates in play, it was a good idea for the sponsor to lock something in long-term. The seven-year loan carries a 3.07% fixed interest rate. “Because of the incredibly attractive profile of the center, interest was strong,” Opalka says. “It was a hotly contested deal, and Principal really stepped up and got creative to win it.”
Opalka says Christopher Commercial is done with loans and refis for the time being, but it’s a good time for other CRE owners to consider looking for debt, especially if the owners are long-term holders. Interest rates mean borrowing makes a lot more sense these days. “You don’t want to be a short-term borrower with a long-term hold,” Opalka observes. “Rates are at their absolute bottom of the historical indexes and borrowers need to look at locking those rates in today. They have nowhere to go but up.”