Norwalk, CT-based GE Real Estate's senior note is unchanged by the mezz transfer. "It was marketed to others, but I don't know if it was widely marketed," Mark Witt, managing director of Chicago-based Transwestern Realty Finance Partners LLC, tells GlobeSt.com about the mezz buy. Equastone's new lender provided a Libor-based, floating rate supported by GE's senior note, which carries the earn-out provision for leasing costs, he explains.
In today's capital markets, mezzanine lenders with the financial wherewithal to quickly do deals are becoming an endangered species. "I know they were picking lenders who could come to the closing table," Witt says. Transwestern Mezzzanine Realty Partners III, launched in 2007, should close out its final raise this summer, tipping the equity scale to $400 million to $500 million.
[IMGCAP(2)]"Witt says the fund's till exceeds $300 million right now. To date this year, $125 million has been placed, but the year could push the deployment to $175 million, possibly $200 million, before the calendar turns. "There's a gap in the capital stack and we're trying to fill that void," Witt stresses.
Witt says the fund's last investment in the region was December 2006. "We didn't find the right opportunities in that timeframe," Witt says. "It's not the market." The San Diego-based Equastone's portfolio, totaling 13 buildings, had the right formula because "it was a nice cross blend, diversified submarkets and properties," the loan arranger says, citing a balanced mix of stabilized space and unfilled blocks.
Tom McCahill, managing partner of Transwestern Realty Finance, says in a press release that Equastone's leasing and management team, which includes Transwestern Dallas, struck a chord of confidence with the lender. "We like Equastone's aggressive approach to leasing and management," he says.
Transwestern Realty Finance Partners, a subsidiary of Chicago-based Transwestern Investment Co. LLC, was established to manage its high-yield and fixed-income real estate principal investments, including the mezzanine fund. Witt says the mezz fund targets core properties with income-producing revenue streams. The LTV's ceiling is 85%. To date, Transwestern has backed 85 mezz loans totaling $1.1 billion. "We look at Dallas as a market that we will be doing other transactions," Witt says.
The Equastone portfolio, bought in August 2007, consists of the 180,503-sf Palisades Central I and an adjacent land parcel at 2425 N. Central Expressway plus the 240,935-sf Palisades Central II at 2435 N. Central Expressway, both in Richardson. In the Las Colinas-Irving submarket, it bought the 446,031-sf 125 E. John Carpenter Fwy. and 298,161-sf MacArthur Center I and II at 5601 N. MacArthur Blvd. The Dallas properties are the 215,016-sf Addison at 14951 N. Dallas Pkwy.; 319,758-sf Aberdeen at 14841 N. Dallas Pkwy.; 146,704-sf Greenway I and I-A at complex at 2150 and 2100 Lakeside Blvd. in Richardson and the 154,329-sf sister, Greenway II at 2400 Lakeside Blvd.; 233,543-sf 3333 Lee Parkway in Dallas' Uptown; 634,381-sf Stemmons Place at 2777 Stemmons Fwy.; and 274,684-sf Stanford Corporate Centre at 14001 N. Dallas Pkwy.
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