Metropolitan Capital Advisors Arranges $5,512,000 Acquisition Loan For A 9.77- Acre Lot In Frisco

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a land acquisition loan for a 9.77-acre tract located in Frisco, Texas at the northeast corner of Read more

Metropolitan Capital Advisors Arranges A $4,700,000 Construction Loan For UC Health Emergency Room (Arvada)

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a $4,700,000 construction loan for UC Health Emergency Room, located in Arvada, Colorado. The 0.69-acre site is Read more

Ground Leases-Friend or Foe?

On the surface, a ground lease seems like a simple concept: a landowner grants permission for a tenant to use their land in exchange Read more

What Do Baby Boomers and Millennials Have In Common & Why It's Important in Commercial Real Estate

By Charley Babb What do Baby Boomers and Millennials have in common? They both like to spend money. While they may spend their money on Read more

The Economic Benefits of Walkability

By: Brandon Wilhite Starting with the Federal-Aid Highway Act of 1956, the way cities were developed in the United States began changing. Although it was Read more

Brexit – Immediate Effect on Commercial Real Estate?

— By Sunny Sajnani In late June 2016, a historic referendum was voted on approving the British withdrawal from the European Union (EU).  The immediate Read more

Hotels: What Inning Are We In?

By: Justin Laub I recently returned from the Urban Land Institute’s national conference on hotels and resorts. The last time ULI held this event was Read more

Choppy CMBS Market Hoping For Resurgence

By Charley Babb CMBS issuance for the first quarter of 2016 was roughly half of the production for the same period in 2015. This has Read more

Predevelopment Risk, What Is It?

MCA was recently retained by a sophisticated client to arrange a construction loan and secure a joint-venture equity partner for a very large project Read more

Metropolitan Capital Advisors Arranges a $14,440,000 Fixed-Rate Permanent Loan

Metropolitan Capital Advisors has arranged a $14,440,000 fixed-rate permanent loan on a Portfolio of two office properties located in the Dallas Metroplex. The Portfolio Read more

UT Real Estate Finance & Investment Center; Long on Longhorns, Short on Bull

-By Scott Lynn Being involved in commercial real estate has always been a continuing educational experience. Not only is it gratifying to embrace these experiences Read more

Take a Ride on the CMBS Rollercoaster

— By Sunny Sajnani The Commercial Mortgage-Backed Securities (CMBS) market has experienced a series of ups and downs, creating a very uncertain start to 2016.  Read more

PRE-REVIEW…When the DUS Settles

By Duke Dennis If you are an apartment owner or buyer in Oklahoma, did you know that the Federal National Mortgage Association (also called “Fannie Read more

The Details of a $2,593,000 Interim Construction Loan for Roanoke Crossing

Metropolitan Capital Advisors has arranged a $2,593,000 construction loan for a to-be-built 24,000 s.f. retail center located within the Roanoke Crossing Power Center, which Read more

Home is Where the Heart is in the Hot Senior Real Estate Market

by Kevan McCormack Senior Living continues to be one of the hottest real estate “asset classes”.  Within the broad Senior Living classification, the industry is Read more

Wading Into the Waters of a Volatile CMBS Market

By Brandon Wilhite The CMBS market plays a vital role in commercial real estate by providing liquidity to the market. CMBS provides long-term debt financing, Read more

Condos: They’re Back

By: Justin Laub Remember when condos were getting built all around the country and we had overzealous banks, liar loans and no down payments? That Read more

The Power of RECA (Real Estate Capital Alliance) Rides Again

By Scott Lynn Metropolitan Capital Advisors is a member of the Real Estate Capital Alliance (RECA www.reca.us). RECA is a professional association of 18 independently owned Read more

5 Takeaways from 2016 Commercial Real Estate Finance Conference (MBA/CREF) In Orlando

By Todd McNeill The annual Mortgage Bankers Commercial Real Estate Finance (CREF) Conference held in Orlando last week does not need an introduction.  After three Read more

Who Says The Industrial Warehouse Real Estate Market Isn’t Sexy?

By Roger D. Wyche With all the attention being paid to CRE announcements such as those from Toyota, Liberty Mutual, the Dallas Cowboys, Charles Schwab, Read more

Commercial Real Estate Capital Markets are Liquid; Development Accelerates During 2015

By Scott Lynn Commercial real estate capital markets have gone full cycle since the depths of the Great Recession. Capital providers are now considering a Read more

Metropolitan Capital Advisors Arranges a $9,650,000 Acquisition Loan for a Plano Office Building

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged an acquisition loan for the Plano Parkway Business Center office building located in Plano, Texas.  MCA arranged Read more

Online vs. Brick & Mortar Retail – Where Are You Shopping for the Holidays?

— By Sunny Sajnani In today’s world of Uber and Amazon Prime, it’s obvious that people are focused on convenience in their consumption.  Yesterday, I Read more

Is it 10-7 for the 1031 Exchange?

by Charley Babb In their heyday of the 1970s and 1980s, citizens band (CB) radio users utilized the “ten code” as part of their style Read more

Looming Rate Hike Means CRE Values Have Peaked? Not so Fast…

By Brandon Wilhite On December 16, the Federal Open Market Committee (FOMC) will meet to discuss, among other things, whether to raise the Federal Funds Read more

Metropolitan Capital Advisors Arranges $5,512,000 Acquisition Loan For A 9.77- Acre Lot In Frisco

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a land acquisition loan for a 9.77-acre tract located in Frisco, Texas at the northeast corner of Legacy Drive and Eldorado Parkway. The Property is located just a few miles north of the “$5 Billion Mile” in the heart of Frisco’s booming development market.

The Property is situated adjacent to an existing Market Street anchored shopping center and across the street from a Target anchored power center. Retail occupancies and rental rates remain healthy which continues to drive strong tenant demand for pad sites and inline retail space.

MCA Principal & Senior Director, Todd McNeill closed the $5,512,000 loan with a regional bank that provided a two year loan term with “interest only “payments while the developer plans to sell off pad sites and considers further development.

Since 1992, Metropolitan Capital Advisors has closed in excess of $12 billion of debt and equity transactions. National Real Estate Investor Magazine has consistently ranked MCA as one of the top CRE Financial Intermediaries in the US. MCA completed over $600,000,000 of commercial real estate financing during 2015.

For More Information Contact:

Todd McNeill

972.267.0600

www.metcapital.com

tmcneill@metcapital.com

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Metropolitan Capital Advisors Arranges A $4,700,000 Construction Loan For UC Health Emergency Room (Arvada)

Metropolitan Capital Advisors, Ltd. (“MCA”) has arranged a $4,700,000 construction loan for UC Health Emergency Room, located in Arvada, Colorado. The 0.69-acre site is located just off the SW corner of McIntyre Parkway and West 64th Avenue.

The Property is adjacent to a grocery-anchored retail center that includes a King Soopers Market-place, Kohl’s, Ace Hardware, KeyBank, Prestige Fitness, FirstBank and Buffalo Wild Wings. UC Health chose the location due its proximity to St. Anthony Hospital, which is located 10-miles south of the site.

Charley Babb, Senior Director and Principal of Metropolitan Capital Advisors’ Denver office, and Senior Associate, Tiffiany Mullins, were responsible for placing the $4.7 million construction loan with a community bank located in Denver. The loan is a five (5) year term with twelve (12) months interest-only at 4.20%, followed by a 25-year amortization.

Since 1992, Metropolitan Capital Advisors has closed in excess of $12 billion of debt and equity transactions. National Real Estate Investor Magazine has consistently ranked MCA as one of the top CRE Financial Intermediaries in the US. MCA completed over $600 million of commercial real estate financings in 2015.

Charley Babb

303.647.9032

www.metcapital.com

cbabb@metcapital.com

For More Information Contact:

Tiffiany Mullins

303.647.1123

tmullins@metcapital.com

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Ground Leases-Friend or Foe?

On the surface, a ground lease seems like a simple concept: a landowner grants permission for a tenant to use their land in exchange for rent. This agreement seems easy to grasp, but if you look beneath the surface you will uncover some hidden details that often go unnoticed.

For starters, a ground lease allows the tenant the right to make improvements (e.g. build a hotel, retail shopping center, apartment complex, or even dig/drill) on land they do not own in exchange for annual rent. A typical lease term of a ground lease is between 50 to 99 years, with the tenant not only paying an escalating annual rent, but in most cases all the other expenses tied to the property. Ground leases have to be long term in nature to justify the tenant making improvements to land they will ultimately concede to the landlord upon the lease expiring.

Although it seems like there is not a lot of upside for the tenant, burdened by rent and other expenses to use land, there are a few benefits. For one, buying land can be expensive, especially when talking about development/acquisition deals in urban/populated environments. The ground lease agreement will enable the tenant to save upfront costs on land, which will free up capital for other expenses such as construction costs. Alternatively, maybe it is not a cost saving tactic, but simply the landlord is unwilling to sell a highly desirable parcel of land. Under this scenario, the tenant might be willing to engage because the project economics are too enticing to pass up.

The tenant will be saving costs upfront; however, over the long term, all these expenses attributed to a ground lease will most likely be higher than purchasing the land outright. Another disadvantage for the tenant is obtaining financing with an unsubordinated ground lease, because the landowner will have hierarchy of claims over the lender. The lender will not be able take control of the land upon default of the tenant, and therefore might lend less or not at all. Moreover, properties constrained with ground leases will continually lose value to reflect the landlord taking ownership of the improvements, as the lease gets closer to expiration. Lastly, the ground lease might be restrictive to how they develop the land or use it in the future, preventing the flexibility granted when the tenant owns the land free and clear.

Flipping the coin to the other party of the agreement, the landlord, also has upside and downside in entering a ground lease agreement. The first and most obvious advantage is the landlord still owns the land, making it a stable long-term investment, especially for family-owned land that needs to be put to economic use. Not only is the landlord collecting rent and most other expenses tied to the property, but the landlord is also benefiting from the appreciation in the land value as improvements are constructed on their land. Depending on how the lease is structured, the landlord might also retain control on how the land is developed in the future, requiring the tenant to seek approval before making dramatic changes to the property. Furthermore, renting out the land does not trigger a capital gains tax like it would during a sale; upon execution of the ground lease, no income tax event occurs until the landlord starts collecting rent.

While it might seem like the landlord is in the driver’s seat collecting rent with little to no downside, this isn’t entirely the case.  One big financial risk facing the landlord is the risk the borrower defaults on the loan. causing the landlord to lose the land, if the landlord is in a subordinate position to the lender.  Another down side for the landlord is that rent collected on a ground lease is taxed as ordinary income, which is taxed at a higher rate compared to the capital gains rate.  Lastly, borrowing against the equity built up in land under a ground lease can either be restricted or prohibited depending on the terms of the ground lease.

A ground lease agreement is more complex than initially meets the eye; therefore, obtaining financing for acquisition/development deals with ground leases can be difficult. Please contact any Senior Director at Metropolitan Capital Advisors to help you navigate the complex capital markets.

The Author, Andrew Hanzl, can be easily reached at Ahanzl@metcapital.com

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