Buchanan Funds $40M for Developments

NEWPORT BEACH, CA-One developer has started a new mixed-use project with a $24.7-million construction loan arranged by Buchanan Street Partners and another has launched a value-added play with the locally based investment bank as a $15.7-million equity partner in an industrial project. The $24.7-million loan, for a project in the Canyon Country area of Santa Clarita, provides the financing for a combination of office and retail space in a 100,000-sf project to be developed by Cramar Holdings.

The Cramar Holdings development will be split between approximately 80,000 sf of office space and 20,000 sf of ground-floor retail space, plus a 120,000-sf subterranean garage. According to John Rozelle, a vice president in the Los Angeles office of Buchanan Street Partners, the construction loan required structuring to address deal complexities like the required leverage of more than 80% on a speculative development and "the uniqueness of the property within the market."

Rozelle points out that underwriting standards have tightened lately, especially for speculative construction without preleasing. To address these tighter underwriting standards and potential interest rate swings, Rozelle says that Buchanan Street arranged an 18-month forward commitment for permanent financing for the project.

In addition to the high-leverage $24.- million construction loan, which is priced at prime plus 1%, the financing agreement provides for a 10-year permanent loan. The permanent loan is locked at Treasury plus 135 basis points, or 5.95% for 18 months.

In the other deal, Buchanan Street Partners provided $15.7 million in equity and arranged a loan through AIG Global Investment Corp. for the acquisition of two buildings totaling 467,000-sf of R&D/industrial space at Conejo Spectrum Business Park in Thousand Oaks, a project sponsored by Voit Development Co. that was reported on recently by GlobeSt.com. The joint venture of Voit and Buchanan will create value through the leasing and re-tenanting of the two-building project, according to Steve Blue, senior vice president of Buchanan Street Partners.

Blue explains that the buildings, at 1445 and 1446 Lawrence Dr., "provide a great opportunity to improve existing space and leverage the fact that a lot of the square footage is currently unoccupied--but leased--by two tenants." The properties are 93% leased but only 55% of the space is physically occupied, "opening the door to improving value and diversifying the tenant mix," Blue says.