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CTL Financing Helps Large Deal Close

'The life company got a better loan and some flip profit, the GSA got a landlord that wasn't in bankruptcy and we got to own the property.'

By Michelle Napoli | Updated on October 08, 2009

BIRMINGHAM, AL—The recent trade of the 587,528-square-foot Social Security Center building here isn’t just notable for its size, it also is notable for the debt financing component of the transaction.

Transamerica Life Insurance, part of the Aegon Group insurance organization, had provided the building’s original construction and permanent loan financing to its developer, Opus South. But with Opus South in bankruptcy, explains Doug Blough, CFO of Net Lease Capital Advisors, one of the new owners of the building, and no cash offers coming in at above the loan value in the bankruptcy auction, the lender put in its own winning bid at the loan amount of $140.7 million.

It did not, however, want to take ownership of the property, Blough explains, and “flipped their contract position to us.” And not only did Net Lease Capital Advisors and its partners in the deal—Rainier Capital Management and private investor Ray Gee—help avoid that very scenario, it also worked with Transamerica to transition the financing to be more advantageous for the lender: from a normal real estate loan on its books, which requires the insurance company have reserves of 10%, to a credit tenant lease loan, which since characterized as a corporate bond requires a mere 30 basis point reserve, Blough notes.

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