Younan Finance Closes Second Debt Deal

Orange Tower is a Maguire Properties asset at 500 N. State College Blvd. in Orange, CA, that is part of the EOP Southern California portfolio that Maguire purchased last year from Blackstone. Younan, who writes an office blog for GlobeSt.com, tells GlobeSt.com that thepurchase of the $6.5 million B note, which the company is acquiring from Rubicon Capital America LLC, is a sign of the times. When the CDO market shut down during 2007, many REITs that were accumulating assets for securitization using short-term warehouse and repurchase facilities were left with short-term debt that could not be refinanced via the CDO market, he explains.

Younan points out that the Orange Tower property is "a high quality, performing asset." Although the initial plan for Younan Finance calls for investing in performing and nonperforming loans, he says that the company has so many opportunities to invest in performing loans that it may well be able to place the entire $200 million without turning to nonperforming loans.

"We have such a big pipeline of inventory of performing loans that we feel we can satisfy that $200 million and more buying paper on performing loans," Younan says. He tells GlobeSt.com that the company might be able to place the $200 million in 60 days or less.

The $200 million is entirely Younan money, which has enabled the company to "be agile and move quickly," he says. Once the company has placed the $200 million, it may take in financial partners for further investments in office loans, he says.

After forming Younan Finance in April, Younan acquired its first loan earlier this month, a $22.9 million mezzanine note on the 1.4-million-sf Thanksgiving Tower in Dallas. Younan says that in addition to acquiring debt on Southern California properties, the company is now ready to move back into buying office buildings here. The Los Angeles-based firm sold its Southern California assets some time ago and stayed out of the market because it felt that prices were too high and cap rates too low.

"Now we feel that the time is appropriate to get back in the Los Angeles market," Younan says. "We feel that this is a good time to buy because there are a lot of assets on the market but a lot fewer buyers for them. Valuations are far more reasonable today than they were in the past," he says.