$295M Refi Repackages 8M SF With Fixed Rate

ATLANTA-BlueLinx Holdings Inc. has closed a $295-million refinance, getting $130 million of financial breathing room with the deal. The new capital replaces a floating-rate vehicle with a fixed-rate mortgage collateralized by 60 distribution centers, totaling 8.2 million sf in 37 states.

"Their rate fell by a very material amount," Greg Greene, director for CBRE/Melody in Dallas, tells GlobeSt.com. "They picked up an additional $130 million of proceeds and they now have the benefits of a fixed rate." Greene packaged the deal in a 50-50 split between New York City's Deutsche Bank and Charlotte, NC-based Wachovia Bank. The 10-year loan carries a 6.4% fixed-rate interest. "The fixed rate was lower than the float," he says.

BlueLinx, a building products distributor, retired a $145-million loan from Credit Suisse First Boston and a junior $20-million piece floated by WP Carey & Co. LLC--five-year borrowings inked in January 2005. The balance was applied to BlueLinx's revolving line of credit. "By using the surplus proceeds from the mortgage refinancing to pay down a portion of our revolving credit facility, we now have more than $300 million of excess availability on our revolver," David Morris, BlueLinx CFO and treasurer, says in a press release.

Greene says the BlueLinx deal landed on his Dallas desk because the New York City CB Richard Ellis brokers knew his forte is corporate financings for publicly traded companies. "The sensitivities are very different," he says. The BlueLinx deal took six months to pull together, marking the largest financing from the Dallas office in at least two years. Matt Mattox, a Melody associate in Dallas, helped Greene work the deal.

"It was very well received in the capital markets," Greene says. But, Deutsche Bank and Wachovia pulled ahead of their competition because "they had a better understanding of the company than the other lenders," he adds. "Those two banks had a recent history in financing single-tenant transactions." In financial circles, the deal is classified as an "orco-propco," meaning BlueLinx's property company owns the real estate and the operating company is the tenant.

Greene says the borrower's primary driver was the $130 million of breathing room rather than funding up a major cap-ex program or expansion plan. The distribution centers range from vintage to practically new space, with the average standing at 136,600 sf. The BlueLinx distribution channel for 10,000 products from 750 suppliers is supported by 65 distribution centers and sales centers in Denver and its homeport.