Repositionings, CMBS Maturities are Loan Drivers

SAN MATEO, CA—There is a still-growing market demand for commercial real estate refinancing as owners move to capture a property's greater potential in its local market, says private lender Redwood Mortgage. Another big driver for 2017 is CMBS loan maturities, which were expected to hit $6.7 billion in March alone and $108 billion for the year, according to Trepp LLC.

“Any time there's a loan event or change affecting the property, many owners also look at how they can make property improvements, raise the tenant profile or increase rents so they can negotiate even better long-term financing,” said Steve Belleville, director of sales and marketing for Redwood Mortgage, tells GlobeSt.com. “One of our more popular loan programs is a short-term commercial bridge-loan refinance, whereby the owner takes our no-prepay-penalty loan to improve the real estate and the tenancy, then goes back to their traditional financing partner for better rates and a longer term.”

One reason new CMBS lending is tighter are the new restrictions on the lender/loan sponsor. Since December, new risk-retention rules require that at least one sponsor of a securitization or its majority-owned affiliate, retain at least a 5% interest in the credit risk of the securitized real estate. Previously, sponsors would typically sell 100% of the loan to another party.

“We're seeing continued demand for Redwood's private-money solutions for investment real estate,” said Michael Burwell, president of Redwood Mortgage, about the firm's record $100 million in funding last year. “Borrowers like the flexibility and responsiveness we offer, especially when there's a particular need or challenge that traditional lenders can't accommodate. Given the pressures and changes on large, traditional institutions, there's a burgeoning market of mid-to-small investors who have strong properties and balance sheets but who can't get their financing needs met.”

A couple of recent transactions in the middle-market range exemplify the strength of the suburban markets for acquisition and financing. San Francisco-based real estate investment company Graham Street Realty acquired commercial office property Hookston Square in Pleasant Hill, CA. It is a two-building suburban office campus totaling 207,555 square feet.

GSR purchased the off-market property from True North Management Group for $30.4 million as the final piece of a three-property portfolio along with two Denver-metro office buildings. With the portfolio acquisition, GSR has doubled its footprint to six properties totaling more than 730,000 square feet.

Hookston Square, built in 1983 to 1984, is located at 3478 and 3480 Buskirk Ave. As of October 2016, the property was 86% leased to 50 tenants and offers suites from less than 1,000 square feet up to 25,000 square feet. The tenant mix includes medical office, technology, financial services, nonprofit, service, legal, engineering, government and education companies.

Holliday Fenoglio Fowler LP closed the sale of and secured $21.5 million in financing for Hookston Square. HFF arranged the transaction on behalf of the seller, True North, and procured the buyer, GSR. Additionally, HFF worked on behalf of the new owner to secure the three-year floating-rate acquisition loan.

46723 Lakeview Partner LLC recently purchased 46723 Lakeview Blvd., an 86,118-square-foot, partial two-story research and development building located in Fremont, CA, in a $19.25 million sale. The building is situated at the entrance of the highly sought-after Fremont Bayside submarket, which has consistently outperformed the greater Fremont market in terms of both occupancy and lease rates. Upon the close of escrow, the property will be leased back by the current owner and occupant of the building, Genmark Automation, on a NNN basis for a lease term of 10 years.

CBRE Capital Markets facilitated the sale. CBRE brokers Scott Prosser, executive vice president, served as the sales advisory team leader supported by Joe Moriarty, executive vice president, and Jack DePuy, senior associate, all partners with CBRE's Northern California Capital Markets team, along with Mike Filice, senior vice president.

SAN MATEO, CA—There is a still-growing market demand for commercial real estate refinancing as owners move to capture a property's greater potential in its local market, says private lender Redwood Mortgage. Another big driver for 2017 is CMBS loan maturities, which were expected to hit $6.7 billion in March alone and $108 billion for the year, according to Trepp LLC.

“Any time there's a loan event or change affecting the property, many owners also look at how they can make property improvements, raise the tenant profile or increase rents so they can negotiate even better long-term financing,” said Steve Belleville, director of sales and marketing for Redwood Mortgage, tells GlobeSt.com. “One of our more popular loan programs is a short-term commercial bridge-loan refinance, whereby the owner takes our no-prepay-penalty loan to improve the real estate and the tenancy, then goes back to their traditional financing partner for better rates and a longer term.”

One reason new CMBS lending is tighter are the new restrictions on the lender/loan sponsor. Since December, new risk-retention rules require that at least one sponsor of a securitization or its majority-owned affiliate, retain at least a 5% interest in the credit risk of the securitized real estate. Previously, sponsors would typically sell 100% of the loan to another party.

“We're seeing continued demand for Redwood's private-money solutions for investment real estate,” said Michael Burwell, president of Redwood Mortgage, about the firm's record $100 million in funding last year. “Borrowers like the flexibility and responsiveness we offer, especially when there's a particular need or challenge that traditional lenders can't accommodate. Given the pressures and changes on large, traditional institutions, there's a burgeoning market of mid-to-small investors who have strong properties and balance sheets but who can't get their financing needs met.”

A couple of recent transactions in the middle-market range exemplify the strength of the suburban markets for acquisition and financing. San Francisco-based real estate investment company Graham Street Realty acquired commercial office property Hookston Square in Pleasant Hill, CA. It is a two-building suburban office campus totaling 207,555 square feet.

GSR purchased the off-market property from True North Management Group for $30.4 million as the final piece of a three-property portfolio along with two Denver-metro office buildings. With the portfolio acquisition, GSR has doubled its footprint to six properties totaling more than 730,000 square feet.

Hookston Square, built in 1983 to 1984, is located at 3478 and 3480 Buskirk Ave. As of October 2016, the property was 86% leased to 50 tenants and offers suites from less than 1,000 square feet up to 25,000 square feet. The tenant mix includes medical office, technology, financial services, nonprofit, service, legal, engineering, government and education companies.

Holliday Fenoglio Fowler LP closed the sale of and secured $21.5 million in financing for Hookston Square. HFF arranged the transaction on behalf of the seller, True North, and procured the buyer, GSR. Additionally, HFF worked on behalf of the new owner to secure the three-year floating-rate acquisition loan.

46723 Lakeview Partner LLC recently purchased 46723 Lakeview Blvd., an 86,118-square-foot, partial two-story research and development building located in Fremont, CA, in a $19.25 million sale. The building is situated at the entrance of the highly sought-after Fremont Bayside submarket, which has consistently outperformed the greater Fremont market in terms of both occupancy and lease rates. Upon the close of escrow, the property will be leased back by the current owner and occupant of the building, Genmark Automation, on a NNN basis for a lease term of 10 years.

CBRE Capital Markets facilitated the sale. CBRE brokers Scott Prosser, executive vice president, served as the sales advisory team leader supported by Joe Moriarty, executive vice president, and Jack DePuy, senior associate, all partners with CBRE's Northern California Capital Markets team, along with Mike Filice, senior vice president.