Mesa West Closes First Deals in Special Situations Lending Platform

Mesa West Capital has completed the first transactions in its newly launched special situations lending platform. The new lending platform is the next evolution for the firm’s lending capabilities, providing rescue capital, mezzanine and preferred equity up to $100 million.

In the first deals under the platform, Mesa West funded $47 million in two deals located in Chicago and San Diego. In the Chicago deal, LaSalle Investment Management secured a $37 million mezzanine loan to refinance and stabilize a 30-story, 549,000-square foot class-A office building in Chicago’s West Loop. La Salle acquired the property in 2017 and has completed a multimillion renovation and increased the occupancy to 69%.

In San Diego, the firm provided a $10 million mezzanine loan to a joint venture between Montana Avenue Capital Partners and Arsenale SGR for the sale/lease-back of a four-building flex portfolio in San Diego. The seller/tenant in the transaction was Millennium Health. Both the San Diego and Chicago deals included first mortgage loans originated by Wells Fargo Bank. Keith Largay of JLL in Chicago arranged the financing on behalf of LaSalle Investment Management, and Aldon Cole of JLL’s San Diego office arranged the financing on the Millennium Health sale/leaseback.

While the special situations platform is an evolution and expansion for Mesa West, it doesn’t change the company’s core strategy. “Our focus continues to be on financing high quality real estate, with strong sponsors and in markets that have durable long-term fundamentals,” said Mesa West Capital principal Ronnie Gul in a statement about the new lending platform. “This program is a natural extension of our existing business and allows us to provide efficient solutions for our clients as they navigate a challenging economic environment.”

The lending platform is one example of the increasing attention toward distressed assets during the pandemic. In addition to new lending programs like this, many investors have also launched partnerships to take advantage of distressed deals. Earlier this year, Lionheart Strategic Management and Schroders Investment Management North America announced a new loan acquisition agreement to target $250 million in transitional and distressed real estate credit investments. CoStar predicts a large number of distressed sales to hit in the middle of 2021 and posits they’ll surpass the number of those deals in the last economic downturn. CoStar’s models predict a range of between $96 billion and $370 billion.