ARLINGTON, TX-A joint venture affiliated with Windstar Properties has monetized a ground lease by obtaining a $3.35 million loan from a life insurance company. The ground lease covers 4.3 acres upon which the new Baylor Orthopedic and Spine Hospital sits.
Joseph N. Hevey Jr., managing director of Cohen Financial’s Dallas office, secured the fixed-rate, non-recourse loan has a 22-year term with a 6% interest rate. It is fully amortizing.
Developed by BremnerDuke Healthcare, a division of Duke Realty Corp., the hospital is owned jointly by Baylor Health Care System, United Surgical Partners International and Arlington Orthopedic Associates. The owners leased the land for 80 years (including the primary ground lease plus extension options) and developed a two-story, 57,000-square-foot facility on it. The duo pays a monthly fee for the ground lease at 707 Highlander Blvd.
Hevey tells GlobeSt.com that the loan is similar to a credit-tenant lease financing in that the value of the loan is based on the strength of ground lessor, as well as the value of the property improvements.
The deal received a lot of interest from lenders, Hevey says. “In effect you’ve got a $20 million improvement on top of that land, and if the [lessor] defaults on the ground lease payment, the borrower takes over that building,” he explains. “The ground lease is comparable to a high grade corporate bond.”
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