Entering into a new $250 million secured credit facility, HRPT Properties Trust has joined the ranks of those commercial real estate companies that have managed to secure big-ticket commercial loans in the midst of one of the most unfriendly lending environments in history. This is the most desired, a non-recourse loan credit facility, which matures April 24, 2012, and comes with an option for a one-year extension, is backed by a group of office assets owned by HRPT subsidiary Government Properties Income Trust. As of December 31, 2008, there is 99% occupancy in this Investment Property Portfolio consisting of 29 government-tenanted buildings that secured this facility.
A few Commercial Mortgage Lenders participated in the facility. Some are joint lead arrangers Bank of America Securities L.L.C. and Wells Fargo Bank N.A.; Royal Bank of Canada; US Bank National Association; Citicorp North America Inc.; Morgan Stanley Bank N.A.; Regions Bank; and UBS Loan Finance L.L.C. HRPT plans to use the net proceeds from the new credit facility to pay down outstanding debt under its current revolving credit facility.
With Fannie Mae and Freddie Mac continuing to dole out funds, Investment Properties, such as multi-family property owners are able to secure major commercial loans. However, it has been a far different story for other commercial real estate sectors, including office. Financing for most is hard to come by, but as evidenced by the HRPT facility, it's out there, if the Investment Property Portfolio is right.
There is still an appetite for secured lending on certain commercial properties such as Triple Net Lease Properties and Apartment Buildings. According to initial estimates, HRP was envisioning that its Government entity could be worth up to $500 million, so this facility implies an estimated 50 percent loan-to-value.
Some Commercial Mortgage Lenders believe the market is on CTL Financing for net lease properties these days. loans are getting done at approximately 50 to 55 percent LTV. In this case, clearly the lenders are comfortable lending against the leases on those properties. "In addition to its nearly fully leased government-tenanted office properties, HRPT has something else working in its favor". HRPT is not like Macklowe or General Growth Properties; it's not one of the headline companies that overleveraged themselves at the peak of the credit bubble.
We think they're going to be able to make it out the other end of the crisis. "The majority of the banks participating in HRPT's new secured credit facility are recipients of billions in funds from the federal government's Troubled Asset Repurchase Program, designed to unfreeze the frozen credit market by providing banks with the monetary foundation to begin lending again. HRP may be benefiting from the plan, but there are real estate companies that aren't getting that warm and fuzzy feeling from the big banks. Fontainebleau Las Vegas L.L.C. falls in this category.
The developer of an Investment Property, the gargantuan Fontainebleau Las Vegas mixed-use casino resort filed a $3 billion suit last week against a group of lenders--a group that includes TARP-receiving Bank of America and JPMorgan Chase--for reneging on $800 million in prearranged commercial financing.
NNN Commercial Real Estate Resources
We see a growing demand for multifamily apartment buildings and net lease properties to be acquired for a 1031 Tax Deferred Exchange. A 1031 tax deferred exchange (1031 Exchange) is an excellent tool available to owners of commercial real estate investments. Retail Shopping Centers and Triple Net Lease Properties are an ideal debt replacement Vehicle for Investors using a 1031 tax deferred exchange.
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