$47M Refis Eight-Building Industrial Portfolio

LOS ANGELES-The owner of a portfolio of eight industrial buildings in the Los Angeles area totaling 927,000 square feet has refinanced the properties with a $47.3 million loan arranged by Kevin Burkhalter, SVP in the Los Angeles office of Johnson Capital and manager of the Burkhalter Group. Burkhalter placed the non-recourse debt with a major insurance company. The terms include a sub-5% net fixed interest rate for the 25-year loan term with a 25-year amortization schedule, excluding prepayment costs associated with an early refinancing with the same lender. Another attractive loan feature that Johnson Capital negotiated is a flat 1% prepayment option after the 15th year of the loan term.

As a long-time adviser to the borrower with extensive knowledge of its real estate portfolio, Johnson Capital worked with the borrower and lender to select eight buildings in the portfolio that would satisfy the lender’s underwriting criteria while accommodating the borrower’s desire to include buildings of various ages and sizes as loan collateral. Commenting on the transaction, Burkhalter noted: "Our client’s timing was very good. During the 90-day rate-lock period, interest rates had increased 0.66% by loan funding. The interest rate achieved on this debt represents a 22-year career low for the Burkhalter Group on a 25-year, fully-amortizing loan.”

The eight buildings that were refinanced, completed between 1972 and 2006, are 92% occupied. The refinancings involved a combination of paying down a bank line and an early refinance of an insurance company loan.

The existing insurance company loan wasn't coming due for approximately 21 months, but the borrower wanted to take advantage of low interest rates and to recirculate the loan dollars on a bank line of credit for go-forward property development and/or acquisitions.