SAN DIEGO-Locally based American Assets Inc. has refinanced morethan 378,000 square feet of office, medical office and retailproperties with nearly $60 million in CMBS loans. The three includetwo loans arranged by Century City-based Verona Capital Marketstotaling $19.5 million and one arranged by the San Diego office ofHolliday Fenoglio Fowler for $40 million. All three of the loansrefinanced CMBS loans that were maturing, according to co-founderand managing principal Eliav Dan of Verona and senior managingdirector Tim Wright of HFF, who led the teams from their respectivecompanies who arranged the financings.

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The properties that were refinanced included two single-tenantnet-leased retail buildings and a multi-tenant medical officebuilding totaling 32,293 square feet in the Del Mar Heightssubmarket, two office buildings called Solana Beach CorporateCentres I & II totaling 95,753 square feet in the Solana Beachsubmarket and the 250,000-square-foot Solana Beach Towne Center, aclass A retail center in Solana Beach. The Del Mar Heightsproperties were financed with a $7.5 million non-recourse loan at6.35% fixed and the Solana Beach Corporate Centres with a $12million non-recourse loan at 5.9% fixed, compared with rates in thelow-8% range when both were previously financed 10 years ago. The$40 million Solana Beach Towne Center loan was at below 6%. Allthree of the loans were provided by Deutsche Bank Securities.

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

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Dan notes that Deutsche Bank was one of a wide variety ofprospective lenders who offered financing on the properties in acompetitive situation that ultimately "boiled down to a simplecost-of-capital discussion" involving CMBS and insurance companylenders. Although some of the other lenders offered more in loanproceeds, the incremental cost of that capital was too high, soDeutsche Bank won the business, Dan says. He adds that, althoughCMBS financing may not be available for all of the borrowers forwhom it was available a few years ago, it is "quickly becoming anattractive option for top-notch sponsors with high qualityproperties."

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

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