SAN DIEGO-Locally based American Assets Inc. has refinanced more than 378,000 square feet of office, medical office and retail properties with nearly $60 million in CMBS loans. The three include two loans arranged by Century City-based Verona Capital Markets totaling $19.5 million and one arranged by the San Diego office of Holliday Fenoglio Fowler for $40 million. All three of the loans refinanced CMBS loans that were maturing, according to co-founder and managing principal Eliav Dan of Verona and senior managing director Tim Wright of HFF, who led the teams from their respective companies who arranged the financings.

The properties that were refinanced included two single-tenant net-leased retail buildings and a multi-tenant medical office building totaling 32,293 square feet in the Del Mar Heights submarket, two office buildings called Solana Beach Corporate Centres I & II totaling 95,753 square feet in the Solana Beach submarket and the 250,000-square-foot Solana Beach Towne Center, a class A retail center in Solana Beach. The Del Mar Heights properties were financed with a $7.5 million non-recourse loan at 6.35% fixed and the Solana Beach Corporate Centres with a $12 million non-recourse loan at 5.9% fixed, compared with rates in the low-8% range when both were previously financed 10 years ago. The $40 million Solana Beach Towne Center loan was at below 6%. All three of the loans were provided by Deutsche Bank Securities.

Dan, who arranged the $19.5 million in loans with assistance from Verona Capital associate Michael Weiner, tells GlobeSt.com that the new loans are "reflective of the recent reemergence of CMBS financing, which is a welcome development for many borrowers." He says that while CMBS financing may not soon approach the volume realized during the later stages of the last real estate cycle, "It appears that CMBS is regaining at least some of the market share ceded to banks and life insurance companies in recent years."

Dan notes that Deutsche Bank was one of a wide variety of prospective lenders who offered financing on the properties in a competitive situation that ultimately "boiled down to a simple cost-of-capital discussion" involving CMBS and insurance company lenders. Although some of the other lenders offered more in loan proceeds, the incremental cost of that capital was too high, so Deutsche Bank won the business, Dan says. He adds that, although CMBS financing may not be available for all of the borrowers for whom it was available a few years ago, it is "quickly becoming an attractive option for top-notch sponsors with high quality properties."

American Assets is such a sponsor, notes Dan, a former CMBS loan originator for a major investment bank, who points out that all of the American Assets properties refinanced through Verona are well-leased. The Solana Beach Towne Center is 97% leased and is located in a top retail market with high barriers to entry, proximity to high-end housing and exposure to an average traffic count of 233,600 cars per day, according to Wright of HFF, who led a team including associate directors Zack Holderman and Rob Hinckley that placed the loan on the center.