LOS ANGELES—With ample capital in the market, all deal types are finding multiple lending options. Zelman Development Co. has secured $57 million in senior financing to recapitalize the Century Business Center and to buy out its partner. The borrower was asking for a low debt yield on the single-tenant property, but was still able to capture to some lender competition.
“There was limited competition. Many lenders could not get comfortable with the low debt yield and single tenant risk; however, a few recognized the below market nature of the rents and land value of this 40-plus acre site,” Ryan Martin, managing director at HFF, and Anthony Brent, senior managing director at HFF, tell GlobeSt.com. “HFF's industrial team created a competitor market despite the limited competition. The trend this deal represents is that even with tougher deals, there are typically multiple financing solutions available to borrowers provided you educate the market properly and expose the deal to a wide range of lenders.” Martin and Brent secured the funds on behalf of the borrower along with senior managing director Paul Brindley.
AIG funded the financing, which has a 10-year term and a fixed interest rate. According to Martin and Brent, the life company provided this execution in competition with debt fund capital. The structure of the loan positions the borrower for long-term financing in the future while still accomplishing its current business goals.
The 1.4-million-square-foot property is fully leased by Triumph Aviation Group. It uses the two main buildings, which total 1 million square feet, as open work space, while the remaining buildings function as office, hangers, cafeteria, medical office and physical plant services. “This site represents one of the best located infill industrial opportunities in the L.A. metro area offering significant upside in value through the continued repositioning of the existing improvements or through a future redevelopment of all or a portion of the site,” say Martin and Brent.
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