NEWPORT BEACH, CA—Locally based private mortgage banking firm MetroGroup Realty Finance has arranged more than $30 million in financing for the acquisition and refinancing of three different Southern California properties. The assets total more than 194,488 square feet and are located in Laguna Niguel, San Diego and Pomona, CA.
The firm provided $10 million in refinancing on a 29,382-square-foot medical-office building at 25500 Rancho Niguel Rd. in the Mission Hospital submarket of Laguna Niguel. The property is owned and was built in 1992 by the Buie Stoddard Group. MetroGroup provided a 10-year fixed-rate term at 65% loan-to-value.
“Buie Stoddard Group wanted to take advantage of the recent increase in value, together with historically low rates, by repositioning the existing low-leverage maturing loan, says Pat Ward, founder of MetroGroup. “ We drew upon the strength of the borrower’s South Orange County portfolio consisting of 11 well-maintained and desirable properties totaling 750,000 square feet. This allowed us to meet the client’s needs while securing a highly competitive rate.”
MetroGroup also provided $10 million in refinancing for 4S Ranch Village Shopping Center, a 30,606-square-foot, shadow-anchored neighborhood shopping center in San Diego also owned by Buie Stoddard Group. The loan provided replaced the existing maturing loan MetroGroup had previously provided in 2004 for a 10-year, fixed-rate term at a 63% loan-to-value.
Ward says even thought this was a well-performing asset, with historically strong occupancy in an affluent North San Diego residential community, a challenge arose when examining the current physical occupancy of the center. Due to delays in permitting and government approvals, a key tenant would not be in occupancy at funding.
“Even with an abundance of capital in the market, prudent lenders remain careful in due diligence,” says Ward. “Understanding this, we conducted and presented a thorough survey of the property’s submarket to highlight its competitive advantages, as well as Buie Stoddard’s deep experience as an owner and operator. A split funding was structured to the satisfaction of both lender and borrower.”
Ward says that the firm’s “refinance activity is increasing due to a dominant trend facing our industry, which is the upcoming spike in commercial loan maturities beginning in 2015.” The Mortgage Bankers Association forecasts a 72% increase from 2014 to 2015 in commercial and multifamily loan maturities by non-bank lenders, and an additional 34% increase from 2015 to 2016.
Lastly, Metrogroup provided $11.5 million in acquisition financing at a fixed rate of 4.5% for a five-year-term, at a 70% loan-to-value, to investors Bill and Carolyn Klein for the acquisition of Garey Tech Center, a 134,500-square-foot office building at 2771 N. Garey Ave. in Pomona occupied by United Technologies. The buyers were represented by Mike Hartel and Mike Bouma of Voit Real Estate Services, while the seller, Lincoln Property Group, was represented by Clyde Stauff of Colliers International.
“This office building was especially attractive to our client because of its location within the city of Pomona’s newly approved corridor-specific plan,” says Ward. The plan supports redevelopment of approximately 1,095 acres in the city and includes approved residential zoning for future development. “The plan is likely to result in improved property values throughout the city, making this a strong investment opportunity as well as a secondary exit strategy for our client.”
He notes that the transaction was also unique because it was the second property in a two-part acquisition. “We were tasked with helping the client complete a 1031 exchange in acquiring multiple properties. We had recently provided financing for the client’s acquisition of a Kaiser Permanente office property in Anaheim, CA. By working efficiently to arrange this acquisition financing for the Pomona property, we helped the client to complete the 1031 exchange transaction successfully within the allotted timeframe.”