(Read more on the debt and equity markets and the industrial market .)
ORANGE, CA-Borrower Turner Orange LLC of Newport Beach has secured an $11.5-million first mortgage that paid off a construction loan for a 193,000-sf industrial building at 434 W. Meats Ave. in Orange in one of three new financings for industrial properties that were arranged by NorthMarq Capital. Michael Elmore, senior vice president and managing director at NorthMarq's regional office, tells GlobeSt.com that the financing for the 193,000-sf building was based on a seven-year term and a 30-year amortization schedule. Elmore arranged all three of the loans through NorthMarq's correspondent relationship with Nationwide.
The loan closed with the Turner Orange building less than 80% occupied but with no lender holdbacks, Elmore notes, pointing out that Nationwide provided a creative loan structure for the partially leased industrial building with borrowers who are well established and well capitalized. Major tenants in the building, which was constructed in 1967 as a corporate build-to-suit for AKZO by Flour Daniels, are MS International, Carrier Corp. and AKZO Nobel.
Elmore tells GlobeSt.com that the closing of the Turner Orange loan and two other recent industrial property loans are a sign that financings are still closing despite the dramatic shifts in the capital markets, although deal flow has slowed since the turmoil began. He notes that spreads can vary from 50 to 100 basis points between different lenders, with agencies and life companies now typically offering narrower spreads than the CMBS lenders who for so long offered narrower spreads.
In the two other deals that Elmore closed recently, the borrower in both cases was Adma Associates LP of Los Angeles. In both cases Adma paid all cash for the properties and lined up the financing after acquiring the buildings.
One of Adma's acquisitions was a 146,000-sf building at 17817 Valley View in Cerritos, the other a 73,000-sf facility at 540 Maple Ave. in Torrance. The nearly $9.4-million mortgage for the Cerritos building was based on a 10-year term at interest only for one year and then a 25-year amortization schedule.
According to Elmore, both of the buildings have substantial deferred maintenance to be completed by the buyer. The 17817 Valley View building was vacant at closing, and the lender did not require any escrows or holdbacks, although the borrowers signed a guaranty until the building is renovated and leased.
The Torrance loan was a $5.1-million financing based on a 10-year term at interest only for 1.5 years, followed by a 23.5-year amortization schedule, with no escrows or holdbacks. Like the Cerritos property, the Torrance building has substantial deferred maintenance, which the borrowers anticipate completing after two short-term tenants vacate the building.
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