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Commercial Mortgage Universe

Recent commercial mortgage activity

July 5, 2007


photo of Coco Salazar

Commercial mortgage activity was topped by a financing package in excess of $400 million that will allow development of a luxury hotel and residential property.

But first, Santa Monica, Calif.-based Fremont General Corp. announced it completed the sale of its commercial real estate lending business and outstanding commercial real estate loan portfolio to iStar Financial Inc. Terms of the deal were not disclosed.

Hudson Realty Capital LLC, a New York-based real estate private equity firm, reported it opened a new regional office in Miami, Fla., to accommodate to opportunities it predicts will come for liquidity-constrained projects as well as commercial development and redevelopments in this region.

Standard & Poor's is calling on all commercial mortgage-backed securities market participants to help maintain the health of such market, according to S&P director Kim Diamond. She made her comments at the recent 13th Annual Commercial Mortgage Securities Association conference in New York, the ratings agency announced.

Historically, rating agencies have filled the gatekeeper role in monitoring such things as issuer underwriting standards. The challenged residential subprime market is a major issue causing each CMBS player to increase its quasi-gatekeeper role.

A "spate of concerns, including deteriorating underwriting and origination standards for commercial mortgage loans, increased liquidity, fierce competition among loan originators, and an influx of new buyers, could push defaults higher in CMBS loan pools," the announcement read.

Tremont Realty Capital funded a $43 million loan for the acquisition of 300,000-square-foot mixed-use retail project in Orlando, Fla. The 2-year, non-recourse bridge loan provided for roughly 90% loan-to-cost of the project, which will include excess land for the development of a 300-room hotel that is in the immediate area of the scheduled new sports arena for the Orlando Magic. The borrower acquired this property, being sold out of bankruptcy, at a foreclosure auction, Massachusetts-based Tremont said.

Three separately owned hotels secured $49 million of first mortgage financing arranged by Los Angeles-based Sonnenblick-Eichner Co. A $20 million loan with a 10-year fixed rate was for a 5-story, 107-room Best Western in Oregon; a $17 million non-recourse, acquisition and renovation floating rate facility based on a 5-year LIBOR was for a Hotel Bridgetown in Oregon; and a 10-year fixed-rate loan of $12 million with interest-only payments for the entire term was for a 154-room Hampton Inn in Washington.

Stursberg & Fine closed a $32 million refinance loan that will allow the borrowers to expand a mobile home park in Northern California. The 10-year fixed loan has 5 years of interest only, 30 year amortization and included $12 million cash out. Stursberg did the first mortgage in March 2003. In securitizations of commerical mortgage-backed securities loans, this transaction is reportedly one of the largest that mobile home parks received in 2007, Pennsylvania-based Stursberg reported.

In Southern California, a two-property industrial portfolio secured a $32 million loan funded by Prudential Mortgage Capital Co., a press release stated. The 60-month mortgage is interest only for the first two years, followed by a 30-year amortization. Eastdil-Secured brokered the loan.

A New York property consisting of a four-story Brownstone with commercial overlay and a four-story row-house secured nearly $0.8 million in financing from Connecticut-based Silo Financial Corp.

A 10-acre waterfront subdivision in Connecticut secured a $4.5 million loan from Silo.

An office property was financed by the commercial mortgage arm of New Jersey-based Prudential Financial Inc. The company announced it provided a $20 million refinance loan for a mixed-use facility in Champaign, Ill. Draper and Kramer arranged for the financing of the 10-year loan, which amortizes over a 25-year period. The eight-story property, with 136,077 square feet, includes retail and office space, as well as residential property space consisting of 72 four-bedroom units.

Among retail mortgage activity, Silo also said it financed a $0.4 million loan for two retail stores and two apartments of mixed use in Massachusetts and a $2 million loan for a four-story retail and office building in Rhode Island.

Silo said it was able to do the loans due in part to its direct portfolio lender status and ability to provide bridge loan programs to exit the loans in three to six months penalty free, versus the prohibitive prepayment penalties of other lenders.

In the world of multifamily financing, a $1.6 million loan for a 52-unit apartment complex in Ohio and a $1.0 million loan for a 32-unit complex in Michigan were financed by Love Funding Corp. under HUD programs that included a fixed 6.05 percent interest rate and a 35-year amortization, while $1.2 million was secured by a 31-unit apartment complex in Michigan through a HUD-insured loan with 6.05 percent fixed interest rate and 35-year amortization.

Prudential Mortgage Capital Co. funded a $14 million loan for Strathmore Regency Apartments in Los Angeles, Calif. The four-story complex, with 125 units, secures the 10-year loan, which is amortized for 30 years with a fixed rate.

Deutsche Bank Berkshire Mortgage said it provided a $465-million financing package for the acquisition and development of a 400,000-square-foot mixed-use apartment development project in Hollywood, Calif. The package consists of a 30-year $180-million Fannie Mae new construction forward credit enhancement with an 4.58% interest rate and loan-to-value ratio of about 70 percent; a 3-year $135-million construction loan facility with two one-year extensions; and a $150-million facility backed by unfunded capital commitments that real estate will not secure. The project will be part of the larger 4.65-acre, transit-oriented mixed-use development which will include a 305-room W Hotel and a 143-unit W Residences condominium tower.

Coco Salazar is an associate editor and staff writer for MortgageDaily.com.

e-mail: [email protected]

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