by Kevan McCormack

It is March 21, 2010, and after a year of contentious debate, backroom deals, hardline negotiating, and outright confusion of what the bill really contained, the Patient Protection and Affordable Care Act was passed by the House by a vote of 219-212.  Welcome Obamacare!

Say all the good or evil you want about Obamacare and the provisions the new law contains, but one thing is for certain: the capital markets hate uncertainty!  During the prior 12-18 months, the financing of new healthcare-related facilities that relied in part or in whole on Medicare / Medicaid reimbursements (particularly hospitals, assisted living facilities, and dementia care facilities), all but came to a complete halt!  Since no one really knew what would happen or what provisions the bill might contain, no financing or development strategy could be formulated that would be impervious to any outcome.  There were simply too many variables.

As someone who lived through this period of time and had several new hospital construction projects in the middle of financing when things came to a screeching halt, I can tell you, no one was happier than me that at least an outcome had been reached so that life could resume (whether I agreed with the outcome is irrelevant for this point).  What happened afterward was such a flood of new construction financings for healthcare related facilities that you could hardly believe that we were at the bottom of one of the worst recessions in U.S. history.

Outside of my little paradigm, the healthcare REIT’s, fully mobilized after raising over $18 billion of new capital, were embarking on one of their most active periods of acquisitions and M&A activity fueled by rising stock prices, access to relatively cheap capital, and armed with a relatively new opportunity to enhance returns through the new RIDEA (REIT Investment, Diversification and Empowerment Act) structure passed in 2007, which allows a REIT’s taxable subsidiary to own a portion of the business operating out of the real estate owned by the REIT.  With the healthcare REIT’s leading the charge, there was over $27 billion of senior housing acquisitions during the last quarter of 2010 and the first quarter of 2011, and a near record $27.8 billion during all 2011.

After two years of such rampant activity, broadly improving fundamentals due to the rapid increase in people reaching the age of 65, and just generally a ton of good feeling about the healthcare sector, you would expect that new construction starts are increasing.  The surprising facts is that new constructions starts leveled off in 2011 and are expected to be down in 2012.  Why?  Well, blame it on the conventional lending community.  Yeah, sure, some REIT’s have experimented with plugging the gap and taking some development risk by financing some ground-up projects, but that is not really the best place for them to alleviate their withdrawal symptoms from the past two years activity.  The sector’s acquisition market is becoming more competitive and supply-restricted leading to cap rate compression, which is great if you are a seller of a healthcare property.

I expect the improving fundamentals in rental rates and occupancy, cap rate compression, and continued demand improvements from the aging population to cause developers to push harder on new construction opportunities.  The question is: will the conventional financing be there to accommodate this new demand for construction starts?  I think it will be, but not in the volume demanded until 2013.  I see the healthcare sector thrust back into a state of uncertainty until the 2012 election cycle is over.  Compound the elections with the forthcoming Supreme Court ruling on the constitutionality of the previously discussed Obamacare, and I can see 2013 being the Second Act for the very pleasant performance that we watched in healthcare during 2010 and 2011.

In an effort to reignite the CMBS Securitization market and broaden the buying pool of investors, CMBS issuers have returned to public bond offerings. Most, if not all, of the latest CMBS issues have come to market with public offerings.

This trend began when Goldman Sachs and Citigroup were forced to pull a CMBS offering from the market during August 2011.  When the transaction returned to the securitization markets it included a restructured, larger publicly-offered deal in order to produce a more effective way to attract investors.

A year ago the CMBS market was roaring out of the gates with tightening spreads, increased loan-to-values, more distressed-loan resolutions, and delinquency levels were flattening out.  However, in summer 2011 most of those positive trends took a turn for the worse.  CMBS spreads began to widen. Standard and Poor’s (S&P) announced that it would pull their rating of Goldman Sachs and Citibank’s upcoming securitization. This event forced Goldman and Citi to repackage the issue.  In doing so, the Goldman / Citi offering created a new level of bonds to broaden the pool of buyers, thus creating CMBS 3.0.  Issuers are now offering extra credit enhancement to the highest level of bond holders in the new structure. Several other CMBS issuers followed suit after Goldman and Citibank.  The result has been both good and bad.  The good news… the demand for the highest-rated bonds was strong.  The bad news…the demand for the lower-rated bonds is not as strong.  In other words, the B-Piece Buyer is still the critical element driving the CMBS market, and those buyers are limited.

All this shuffling has led borrowers looking for a CMBS or an insurance company loan to find a bifurcated market.

Clearly, insurance companies, agency lenders (i.e. FNMA) and private book lenders such as pension funds can provide lower pricing on a commercial real estate loan versus a CMBS lender.  For example, in today’s market, Life Company pricing will range from 4% to 4.5%, versus CMBS 5% to 5.75%…about a 100 to 175 basis point premium.

The recent shuffling has caused CMBS spreads to widen, making a clear demarcation between CMBS versus Insurance Company, FNMA and Pension Funds.  The widening spreads were needed to ensure that the CMBS origination shops were able to attract the bond buyers needed to securitize the issues.  The silver lining is that CMBS is still a solid product that most likely can offer a borrower superior leverage.  There is still a huge place in the market for CMBS product, and it is a welcome sight coming off of a 2009 / 2010 where almost zero fixed rates lending was coming from Wall Street.

There are now two classes of borrowers, the Haves and Have Nots. Obviously, to the extent one can access pension fund or insurance capital, why would you go to CMBS? The answer is, CMBS can clearly offer most borrowers a higher loan-to-value and, CMBS will consider secondary and tertiary markets.  As mounds of maturing debt comes due on properties where valuation may very well be the “jump ball,” most assuredly the lending sector that can deliver higher leverage may very well turn into “Lender de Jour.”

Long term, Moody’s Investors Service says structured finance transactions such as CMBS deals will perform better than pre-crisis CMBS pools as a result of improvements in asset quality and transaction structures, both of which were responses to weaknesses revealed during the crisis.

CMBS Issuance is on track to produce over $40 billion of volume, according to a late April Issue of Commercial Mortgage Alert.  For now, the CMBS loan market is steady and a somewhat predictable platform (with respect to pricing and leverage) that will have a much-needed impact on the upcoming wave of maturities.  Before long, pricing will align itself with the insurance companies and pension funds.  Leverage will creep up as market fundamentals continue to stabilize and the thirst for long-term paper increases.

Navigating the waters of CMBS players can be a confusing and time-consuming task.  Today, there are about 20 to 25 active CMBS players who are all not necessarily looking for the same thing with respect to product type, leverage or even borrower / sponsors for that matter.  Some CMBS providers prefer lower-leverage deals with top quality sponsors and, in return, are offering very competitive pricing.  Other CMBS players will move up the leverage curve (and even offer mezzanine financing).  However, expect pricing to be risk-adjusted.  Whatever the financing requirements, Metropolitan Capital Advisors has the capabilities and deep-rooted relationships to access the full spectrum of available CMBS capital to best maximize your objectives.

Lynn’s Dream

Metropolitan Capital Advisors, celebrating 20 years as a commercial real estate finance intermediary, was the dream of Scott Lynn in 1992.  Scott and his wife were visiting the Metropolitan Museum of Art in New York when he told her he wanted to open his own real estate finance firm.  As a newly married couple who had no children, they felt it was the perfect opportunity for Scott to build a brand.

Company Philosophy

Scott says the company’s success spawns from a three-part philosophy: putting customers first, providing services superior to competitors and being the best at commercial real estate finance.  Furthermore, Scott believes that how a company behaves in bad times has more of an effect on success than what the company does during good times. Scott and his staff proved that yet again during the recent recession, as Metropolitan Capital Advisors doubled its business simply by adhering to the three-part philosophy.  During the recession, the company focused on distressed and undercapitalized transactions, a move that enabled MCA to keep all employees while competitors experienced significant layoffs or were forced to join larger companies through mergers and acquisitions.

Experience and Training

Scott also says the success of MCA is directly related to the experience level and training provided to employees.  All current executives underwent a two- to three-year training program.  This training included time spent at a second desk in Scott’s office where they saw firsthand how commercial real estate finance transactions are underwritten, marketed and closed.All  new team members spend at least two years training directly with Scott.

In-House Closing

Another benefit MCA offers its clients is an in-house closing department in its Dallas office, a resource that saves clients money and time getting deals closed.  Having an in-house closing department enables Metropolitan Capital Advisors to take on complicated transactions that other commercial real estate finance companies turn down.

Scott is quick to point out that the company’s responsibility is to the client, and not to the capital sources.  In addition, advisors are taught to be cautious and learn very quickly that saying “no” often works in the company’s favor.  With a closure rate of close to 90 percent, it is easy to see why the Dallas Business Journal highlighted Metropolitan Capital Advisors as “Ideas in Action.”

If you are interested in getting more information to fund your commercial real estate deal, contact us by filling out a form and one of our broker’s will call to discuss your deal.

By Brad Donnell

Prior to the 1970s, most gasoline pumps were full service.  For a few extra cents, someone would come out to your car, stuff

the pump’s nozzle into your tank and begin filling it.  As the tank filled, a friendly face would check the oil level, tire pressures, the condition of the windshield wipers, and give the car a good once-over to make sure everything was in order.  After asking about how your momma was, he would give you a free full size glass with the service station’s logo on it before sending you on your way.  He might even remind you about the spaghetti supper tonight, and that Mary was bringing her sister Sally, and that Sally had a special affinity for gin and tonics.  You left with a full tank of gas, feeling confident you were not about to blow a tire or have your engine seize up.  You now had a new glass to put on the shelf with the other empty jelly jars in the cabinet and you could focus on how much of your marginal BS it would take to coral Sally at the church spaghetti supper later that evening.

That human interaction served several purposes.  It was a first line of defense against a leaky tire that has the potential to leave you stranded on the side of the freeway, or a fresh ear to listen to that strange knocking sound that would eventually mean your flywheel was about to crawl through the transmission housing and try to eat your foot off.  It was another set of objective eyes on a very important piece of equipment and perhaps one of your most prized possessions.  Someone to catch something you might have overlooked or had become accustomed to seeing or hearing.  Most of all, however, you were reminded about the social event that evening, and now had some valuable intel on that randy little minx Sally.

When the world sped up in the late 1970s, people stopped using the full-service pumps, instead opting to pump their own gas.  Cars became more reliable so screw the extra 10 cents a gallon, just do it yourself.  Yet no one was there to remind you about the church supper, Sally or where the supply of gin curve met the optimal point of equilibrium.  So instead, you went home, popped on one of three network channels and fired up a TV dinner, oblivious to the failing wheel bearings in your back left tire and your neighbor who was now making substantial progress with Sally.

The desire to do something for yourself by yourself—because you are convinced you know how to do it better—can be emotionally rewarding, but the isolation from an extra set of eyes to point out problems and give valuable advice can often be shortsighted.  The relationship between you and that guy pumping your gas can be much more significant than the simple act of filling a tank of gas if you let it be.

At its core, commercial real estate is much more about people and their ability to forge successful relationships rather than buildings, yields, and coverage ratios.  The relationships developed between brokers, developers, appraisers, tenants, lawyers, lenders and all of the people in between that work to close commercial real estate transactions are critical to the success or failure of any given deal.  Most of these types of relationships have been fractured during the meltdown of the capital markets and there is a desire to do things in as much isolation as possible.  Tenants have gone out of business, developers have gone bust and squabbles over even minor things perpetuate the daily routine.  There is a pervading fog of blame, distrust, animosity, and fear today.  The desire to do as much as possible without anyone else’s help or input is as strong as it has ever been and not for the sole purpose of saving a couple of bucks.

New participants in the market have moved in to replace the void left by many of the most seasoned and experienced developers and lenders.   Many grew up in a world not even knowing what a full-service gas station was.  What seems to be lost in the post-meltdown lending environment is the vital fabric personal friendships provide to both the perspective and the critical nuance it takes to execute commercial real estate transactions today.  That guy pumping your gas 40 years ago also pumped everyone else’s.  He knew everyone.  He knew who was naughty and who was nice.  He knew Larry’s son mowed yards for only $5 and he also knew that Bob’s son would mow and edge for the same $5 and was a nice kid, unlike Larry’s miscreant of a son who would also raid your beer fridge in the garage and then hike his leg on your ligustrum bush.

Capital may seem to be an inelastic commodity—much like gasoline.  It might be cheaper by a couple of cents if you drive to the corner to get gas.  Surely, it makes the car run just as well, so why bother striking up a relationship with the guy at the pump, or pay the extra freight, and have the attendant put the gas in when I can do it myself?  The answer is that capital, be it bank debt, securitized debt or private equity, has its own individual “personality” you need to be very familiar with.  Some of that “gas” has a lot of additives you don’t want and sometimes someone has tampered with the pump.  That guy at the pump can tell you to stay away from the station at Main Street and Lexington because he knows they drop the water hose in the tank after dark.  He can also tell you that the tire store on the other side of town sells retreads as if new.  If your water pump is on the fritz, he knows who has the best price in town and can find you a new one today instead of waiting for the dealer to ship one in from mainland China three weeks from next Tuesday.

When it comes to borrowing money for commercial real estate, longstanding personal relationships and trust are more crucial than debt coverage or ratios or constants or whatever else gets cooked up in the underwriting kitchen these days.

Sometimes, that guy at the pump knows exactly what kind of gin Sally likes, and if you get to know him well enough, he can probably keep your car running pretty good as well.

Metropolitan Capital Advisors (“MCA”) recently closed a very difficult transaction:  the refinance of the Sunwest Portfolio—a collection of 25 single and multi-tenant properties scattered across eight states.  Of the 25 properties, 20 were owned fee-simple while the remaining properties were subject to ground leases.

Our client was faced with a maturing conduit loan on a much larger pool of properties (60-plus assets across 15 states).  MCA identified and carved out a select group of these assets to finance into a new permanent mortgage.  Simultaneous with the refinance, the sponsor was able to sell nine properties to pay off the existing debt in full…ALL ON THE SAME DAY!

Reflecting on the events that took place and the decisions that were made during the preceding nine months in order to consummate the deal, this transaction supports the notion that using an experienced finance intermediary (preferably Metropolitan Capital Advisors) will add significant value to your capital requirement pursuits.

Below is MCA’s Top 10 list on how our firm delivered superior results on the Sunwest Portfolio:

1.       Underwriting:  MCA quickly mobilized to underwrite a transaction based on today’s market assumptions.  MCA has a deep bench of producers and analysts that have underwritten thousands of deals.  We were able to tear apart the Sunwest Portfolio within a couple days and present a proposal to the client that met all of their objectives.  The proposal carefully analyzed which properties were financeable along with providing the client with a solid feel of what loan terms they could expect.
2.       Confidence:  Based on the initial underwriting analysis, MCA was confident with respect to its ability to deliver the proposed financing package and, indeed, our firm beat its competitors for the business.  One competitor stated the deal was “too much work” and the other competitor had no idea how to structure a complex multi-property refinance.
3.       Capital Sourcing:  The Sunwest Portfolio was a very difficult transaction due to complexity and number of properties involved.  Most lenders simply don’t want to do that much work.  However, MCA presented the transaction in such a simplified manner that lender candidates easily absorbed the details.  MCA reached out to over 50 capital providers and found an entrepreneurial CMBS lender that recognized the strong qualities of the deal.
4.       Market Volatility:  MCA has the ability to be agile—when the markets move abruptly, we immediately adjust our strategy.  The initial marketing of the Sunwest Portfolio occurred in July 2011, just weeks before the U.S. downgrade by Standard & Poor’s, which, in turn, caused a massive pullback in the CMBS market.  MCA stopped its efforts knowing the CMBS market would stabilize after Labor Day…which it did.  Upon “re-launch” post-Labor Day, CMBS Lenders were again hungry for deals and we had immediate interest.
5.       Certainty of Execution:  MCA does not like to hold auctions between potential lenders or equity providers.  We prefer to award the business to the capital provider that puts their “best foot forward” from the beginning.  We received three very good quotes that were all competitive—proving the CMBS market is fairly efficient.  The client selected the lender who offered some bells and whistles that separated their proposal from competitors.  However, the lender was not selected based on a lower interest rate.  Rather, the client selected the lender who offered the highest degree of certainty they would execute the transaction as advertised.
6.       Processing:  MCA has an in-house Closing Department that is responsible for coordinating tenant estoppels, SNDAs, surveys, site inspections, legal, etc.  This is a HUGE “value-add” to our clients that do not have the time or patience to coordinate all the nuances of getting a loan processed and closed.  You can only imagine the amount of processing required for 25 property portfolio across eight states!
7.       Third-Party Reports:  Not only does MCA coordinate the delivery of due diligence and arranging site inspections for all the third-party reports, we also respond quickly when the draft reports initially come back with unfavorable commentary.  On the Sunwest Portfolio, the Property Condition Assessments (PCAs) contained numerous comments regarding repair issues that could have jeopardized the transaction.  MCA quickly demonstrated that a majority of these repair issues were the responsibility of the tenants.  MCA got the tenants to acknowledge the required repairs in their estoppels versus burdening the proposed loan.
8.       Loan Structure:  MCA’s strongest suit is to come up with creative solutions to problems “on the fly.”  When the new lender came up with a “case of the shorts” on loan proceeds, MCA negotiated a cash flow sweep versus putting the lender requiring upfront reserves for capital and tenant improvements.  MCA also raised additional proceeds via a mezzanine loan.
9.       Closing:  MCA’s Closing Department has consummated over 1000 transactions exceeding over $8.5 billion.  Our Senior Closer coordinated the closing of the refinance to occur simultaneously with nine  property sales from the existing portfolio.
10.   Client Appreciation:  MCA works hard to close deals on behalf of our clients.  Customer satisfaction with repeat business is our No. 1 GOAL.  Following the Sunwest Portfolio closing, MCA immediately entered into a discussion on our client’s next deal.  Mission Accomplished!!!

The value of using an experienced finance intermediary (i.e. MCA) was a reoccurring theme throughout the Sunwest transaction. MCA is not only fearless in the wake of difficult deals—we embrace them with open arms.  Clients see the true value of having our firm on their team, especially when times get tough.  Once the value perception is acknowledged, Clients keep us in the loop on all of their real estate capital requirements.

As the newest Senior Analyst at Metropolitan Capital Advisors, I have been handed the torch to shed some light on the inner workings of the Firm from the analyst’s perspective.

The analyst role at MCA is unique in many ways; it is structured to help one grow, solve problems, and understand what it takes to be not only a reputable broker, but a trusted advisor. The analyst role goes far beyond the “data entry” you would find in a typical lending or financial institution, where underwriting guides and loan committees stifle any creativity – ultimately leading to monotony. The analyst gets directly involved in the day-to-day issues that arise in placing commercial real estate capital, as well as direct exposure to the complexity of Client relationships.  While underwriting hundreds of transactions is crucial in properly analyzing a commercial real estate deal, the key understands the value-add that is provided to our Clients in solving and structuring their capital requirements.  The solution is typically more advisory in nature, as MCA is focused on what is best for the Client at any given point in time.

Before my days at MCA when I was looking for a job fresh out of grad school, every big company’s recruiter would say “every deal is different and that no two days are the same” and of course, I drank the Kool-Aid.  When I finally landed that coveted “job” in the middle of the recession, I didn’t have much of a choice but to work on the only asset class that was worth a damn — multifamily — and what better way to finance them via government sponsored agency programs such as Fannie Mae?!  While I learned a great deal about financing apartments, I soon realized that there are only so many ways to underwrite a 95% occupied, Class “A” apartment complex.  It seemed that due to the credit crunch, all my time was being focused on the credit of some rich guy in the “1%”, and less about what I love… commercial real estate!

Since joining MCA, every deal I’ve done is truly unique and I have learned something meaningful to take away from each transaction.  Working under two Dallas Heavy Hitters at MCA has given me the opportunity to work on a wide variety of transactions across all property types, both stabilized and un-stabilized, and on properties in different stages of development.  Moreover, MCA does not shy away from difficult deals and embraces the challenges that come with closing the transaction.  This in itself not only provides one with the exposure that cannot be found at a big company, but also gives one the opportunity to bounce off ideas with veteran industry pros, which gets the creative juices flowing!  I look back at various excel models and waterfalls I’ve created and modified, and no two are the same.  The analyst’s learning curve never flattens, and just when you think you “get it”, Stage II begins: Learning to Manage Clients.

The system for the analyst to learn both the quantitative and the qualitative factors was set in place many years ago, and has proven to be quite successful.  The MCA analysts prior to me are all Senior Brokers at the Firm and have much to show for their respective efforts, both in terms of transaction volume and experience.

All of these gentlemen went through the similar process in learning to underwrite real estate risk, being creative, managing Clients, and learning to have the empathy to understand the capital provider’s viewpoint.  MCA believes in growing from within and learning from the same lineage — from a culture of hard work, character, self-reliance and Client satisfaction.  MCA prides itself in managing Clients’ expectations and ensuring certainty of execution.

The experience in underwriting a multitude of transactions (coupled with the day-to-day exposure to Clients) are valuable lessons to be learned early on in one’s career and not as easily gained in a large firm or educational institution.  I am fortunate to have mentors who have not only walked in my same shoes, but have actually sat in my chair and worked at my desk.

Two years ago, local and regional banks were not retuning our phone calls about new commercial real estate loan (CRE) opportunities. Our friends in the banking community gave us a standard response: too busy dealing with loan defaults, foreclosures, falling property values, or keeping regulators placated by not making new CRE loans.

What a difference two years makes! It really does feel like spring is in the air again! During the month of March alone, Metropolitan Capital Advisors (“MCA”) completed over $10,000,000 of loan placements with banks that offered very attractive terms to our clients.

Examples of our March bank placements include a $3,450,000 five-year floating rate secured by a fully-leased 18,000 sq. foot shopping center near Ft. Hood military base in Texas. MCA represented a privately-held opportunistic investment fund that had purchased an existing note, foreclosed on the asset, and stabilized the property. The refinance proceeds allowed our client to repatriate their equity investment and pursue new acquisition opportunities. This loan was closed in 36 days start-to-finish.

Other interesting bank placements included a loan on an apartment complex in Houston (purchased two years ago) that is now fully renovated and stabilized.  A regional bank stepped to the table with a $4,250,000 term loan to pay off a high rate/high leverage acquisition loan.  The borrower’s interest rate cost was cut in half — from 12% to 6%. Now the borrower/client is enjoying significant after-debt-service cash flow while they market the property for sale.

Sometimes banks are as competitive as life insurance companies and CMBS/securitized lenders when it comes to offering an attractive fixed rate loan. Included in our March Madness loan closing tally was a $1,700,000 loan secured by a portfolio of light industrial & warehouse properties located in Ft. Worth, where our client locked in a five-year interest rate at 5.85%.

While banks are typically the “go to” source for constructions loans, the ground-up development arena has not exactly been a growth industry when the economy was in a healing mode. Banks need to generate loans to make a profit — so with underwriting and quoting existing cash flow, CRE can easily turn out to be a win/win situation for both the lender and the borrower.

Here is a top ten list on why you might want to consider a bank for your next CRE loan:

1)      Banks can be flexible on structure and will sometimes accept other collateral to get to the desired loan proceeds.

2)      Banks usually do not charge prepayment penalties… a perfect way to park a deal until you sell it.

3)      Bank floating rate pricing is well below the fixed rate pricing offered by other conventional sources.

4)      Banks may also have very competitive fixed rate programs as noted above.

5)      Banks are always the preferred source when construction or renovation is involved.

6)      Banks can agree to “partial release” provisions if you have a “For Sale” deal, such as a condo or land development.

7)      Banks can usually move fast — MCA just closed a deal in 36 days

8)      Banks are relationship-oriented and welcome multiple transactions.

9)      Banks are back in the market, so there is a variety to choose from for most transactions.

10)  Banks with a wide operational footprint can be the best option for out-of-state and foreign borrowers.

The downside (if any) is banks usually require full or partial recourse from borrowers with good credit, minimal legacy, and with strong sponsor credentials. Non-recourse (no personal liability) loans are the exception in the banking world, and are usually only discussed when a transaction is low leverage, low loan-to-value, and has a high debt service coverage.  Banks may also be better disposed to a non-recourse transaction if the income stream is supported by a strong credit tenant.

Knowing what banks to go to, which banks will lend on specific property types, minimum and maximum loan amounts, and other critical lending parameters requires a wide knowledge base to navigate the evolving market.  Since 1992, MCA has historically used the bank community on over 57% of its debt placements — that’s almost $4.8 billion of closed bank loans.  MCA has the deal flow, market knowledge, and established relationships to guide your prospective transaction to the best possible outcome with a wide variety of local, regional, national, and international banks.

DALLAS, March 12, 2012 — Dallas-based Metropolitan Capital Advisors (MCA), a real estate financial intermediary specializing in the exclusive representation of investors, developers and property owners in the commercial real estate capital markets, has successfully secured a permanent financing package with a CMBS lender for the refinance of the Sunwest portfolio—a collection of twenty-five (25) single and multi-tenant properties scattered across eight (8) states. Of the 25 properties, 20 are owned fee-simple while the rest are subject to ground leases.

The sponsor, Rainier Capital Management, a Dallas investment company that has owned the portfolio since 2004, had a maturing conduit note on a much larger pool of properties (60-plus assets across 15 states). MCA identified and carved out a select pool of assets to finance into a new permanent mortgage. Simultaneous to the refinance, the sponsor consummated nine (9) property sales to pay off the existing debt in full… ALL ON THE SAME DAY!

This creative financing/sale structure increased cash flow of the Sunwest portfolio by substantially reducing the interest rate on the new loan and carving out a large pool of properties free and clear of debt. The management company, Emersons Commercial Management (also based in Dallas) was instrumental in helping close the refinance and sales. Emersons has managed the Sunwest portfolio for over 20 years.

The $19.5 million permanent mortgage has a fixed interest rate for 10 years. MCA structured the financing on a 30-year amortization for the fee-simple properties while placing shorter amortization periods on the ground lease properties. The loans were cross-collateralized to ensure steady cash flow across the portfolio for the lender. MCA Senior Director Sunny Sajnani arranged the transaction.

ABOUT METROPOLITAN CAPITAL ADVISORS

Metropolitan Capital Advisors specializes in the exclusive representation of investors, developers and property owners in the real estate capital markets. Since 1992, Metropolitan Capital Advisors has closed in excess of $8 billion of debt and equity transactions on behalf of a multitude of commercial property owners, developers and investors. National Real Estate Investor ranked Metropolitan Capital Advisors No. 20 on its Annual Top Financial Intermediaries list.

Metropolitan Capital Advisors is staffed with a team of professionals who specialize in specific components of the “transaction process” (i.e. underwriting, marketing, processing and closing). All of Metropolitan Capital Advisors’ senior directors have an average of at least 15 years of professional experience. Metropolitan Capital Advisors’ staff has expertise and capabilities in a vast array of debt and equity services, including construction and permanent debt, structured finance, and portfolio transactions.

Raising money in your professional career rarely translates to your personal life. We may live and breathe our profession, but generally I like to try and have some time to decompress. While I may do that from time to time, I never stop raising money.

In 2001, I lost one of my best friends, Ryan Gibson, to leukemia. Ryan not only was one of my best friends, he was my biggest fan. In order to try and continue his legacy and to help fill a void, I started a nonprofit that raises much-needed research dollars, called The Ryan Gibson Foundation. (www.trgf.org)

What I didn’t realize when I started the foundation was how much tougher raising money for a nonprofit is, versus my day job here at Metropolitan Capital Advisors, where I raise money for commercial real estate developers and investors. To make it even more challenging, I chose (or rather Ryan did for me) to fund research, which has no face. Rather than introducing you to a young, promising senior in high school that needs a scholarship, I have to point to a sterile lab filled with scientists. No homeless food shelters to help those in need, but rather more mice to buy to test the theories. Basic science research is where all great therapies and drugs start, but it does have a name and moreover, research does not provide instant results.

In real estate, you are going to usually have a chance to get your money back, while in leukemia research, you are never going to see that money again. You write the check and away it goes on the quest to find a cure. Where it starts to get interesting though, is in the returns on your investment.

You may see a 15% return on your real estate project, but you will never save someone’s son from another chemotherapy shot. You may be able to even re-invest that money time and time again, amassing a fortune, but you will never be able to save a daughter’s life.

We may live and breathe real estate investment, but we oftentimes are reminded, what is ultimately a more important investment in the long run.

Dallas-based Metropolitan Capital Advisors (MCA), a financial intermediary specializing in the exclusive representation of investors, developers and property owners in the commercial real estate capital markets, has arranged two Bridge Loans for the refinance of Southwest Oaks & Summerhill Apartments. Both properties are located in Midland/Odessa, Texas.

Southwest Oaks is a 170-unit (132,500 SF) complex that was built in two phases in 1973 and 1976. The property is located at 4651 Oakwood Drive and 1465 John Ben Sheppard Pkwy.

Summerhill is a 127-unit (106,250 SF) apartment complex that was built in 1979. The Property is located at 3001 North Midland Drive.

“We sourced an unusual interim Bridge Lender who stepped up and funded these loans quickly on behalf of our Client who had unusual timing pressures,” said Scott Lynn, Director and Principal of Metropolitan Capital Advisors.

The Borrower had an immediate need for Bridge Financing to comply with a divorce decree that required the removal of the ex-spouse from the previous bank mortgage recourse obligations. The Borrower is utilizing the Bridge Loan to allow the procurement of a fixed- rate HUD loan that was applied for at the time of the Bridge Loan closing. Today, both properties are over 90 percent occupied.

The loans were underwritten at 62.5 percent LTV yielding a $4.8 million for The S.W. Oaks Apartments and $3.25 million for Summerhill. The interest rate was floating at 6.75 percent over LIBOR for the one-year loan term. The loans were cross-collateralized and on an interest only schedule. MCA Senior Director Todd McNeil was responsible for arranging both the transactions.

Since 1992, Metropolitan Capital Advisors has closed in excess of $8 billion of debt and equity transactions. National Real Estate Investor Magazine recently ranked MCA No. 18 on its Annual “Best of the Best” Financial Intermediaries list for 2011.

About Metropolitan Capital Advisors
Metropolitan Capital Advisors specializes in the exclusive representation of investors, developers and property owners in the real estate capital markets. Since 1992, Metropolitan Capital Advisors has closed in excess of $8 billion of debt and equity transactions on behalf of a multitude of commercial property owners, developers and investors. National Real Estate Investor ranked Metropolitan Capital Advisors No. 20 on its Annual Top Financial Intermediaries list.

Metropolitan Capital Advisors is staffed with a team of professionals that specialize in specific components of the “Transaction Process” (i.e. underwriting, marketing, processing and closing). All of Metropolitan Capital Advisors’ senior directors have an average of at least 15 years of professional experience. Metropolitan Capital Advisors’ staff has expertise and capabilities in a vast array of debt and equity services, including construction and permanent debt, structured finance, and portfolio transactions.