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[IMGCAP(1)]NEWPORT BEACH, CA-A joint venture of the locally based Koll Co. and the Public Employee Retirement System of Idaho has closed on $42 million in refinancing for a portfolio of three office properties in Texas, Colorado and Arizona that the venture acquired in late 2006, according to Cohen Financial. The proceeds refinanced maturing debt and “provided significant cash out,” notes Cohen, which arranged the financing.

The three properties—located in Dallas, Denver and Phoenix—total approximately 500,000 sf and are occupied by approximately 100 tenants. The lender is a life insurance company, which provided a nonrecourse, interest only, 65% loan-to-value floating rate bridge loan that carries an initial term of three years with two one-year extensions.

[IMGCAP(2)]Bruce Krall, a managing director at Cohen Financial’s Newport Beach office who represented the borrower, notes that an attractive feature of the loan is that no reserves for tenant rollover or capital expenditures were held back from loan proceeds. The loan frees capacity on Koll’s credit line, enabling its to pursue its aggressive acquisition strategy going into 2009, Krall adds.

“Even though this was Koll’s second deal with this lender it was challenging in today’s environment given that many of the features in this loan are virtually extinct,” such as nonrecourse, cash out, interest only and zero reserves, Krall points out. “Our longstanding relationship with this lender and the strength of the sponsor—with more than 90 million sf developed and an existing portfolio of more than six million sf of office and industrial properties—played a major role in securing such favorable terms,” Krall says.

[IMGCAP(3)]Jay Spurgiasz, vice president of finance for the Koll Co., comments that, “The lender never wavered through some seriously tumultuous times. They were good the first time around when the market was good, and they were really impressive this time around.” Koll plans to do more deals with the lender, he adds.

The three office buildings that were refinanced are located at 2805 Dallas Parkway in the Dallas suburb of Plano, at 1873 South Bellaire St. in Denver and at 10851 N. Black Canyon Highway in Phoenix.CS Capital Management, Inc. serves as advisor to the Public Employee Retirement System of Idaho. CS Capital Management Inc. serves as adviser to the Public Employee Retirement System of Idaho.

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