Loan Adds Property to Manufacturer Buyout

WESTMINSTER, MA-WM Realty Management LLC has obtained a six-month, $3.3-million bridge loan to acquire a 136,320-sf, three-building industrial facility on 61.1 acres here. WM is an entity established for purchase of the real estate by the New York City-based investment company that acquired Ranor Inc.

Ranor, the seller, supplies metal fabrications for such clients as the Department of Defense and nuclear power companies. It will continue to occupy the facility under a 15-year lease with extension options.

Hudson Realty Capital LLC, also based in New York City, provided the loan for the real estate. Spencer Garfield, HRC's managing director, tells GlobeSt.com the funding represents a 76% loan-to-value ratio. It is secured by a first mortgage on the property as well as assignments of all cash flows, management agreements, rental and other operating agreements, ground leases and licenses pertaining to the site by the borrower.

"Although this was a small deal for HRC," Garfield says, "it was complex because it was in conjunction with the acquisition of the operating manufacturing company that included owner-occupied real estate." He says conventional financing was in place for the purchase of equipment and receivables and the firm was asked to lend strictly on the real estate. "In doing so, we were forced to understand the viability of the tenancy and the overall corporate transaction in addition to our standard asset-level due diligence."

The facility was built in 1972 and expanded in 1998, according to Garfield, and includes 12,000 sf of office space. The property is located in the Route 495, Route 2 West sector of the Metro South submarket, which he says experienced net absorption of 240,000 sf in fourth-quarter 2005 to lead the entire market. "We expect that positive performance to continue in 2006." The asking rental rate for the property, he says, is $3.50 per sf.