consultants are sandburs

Tuesday, September 16, 2014

Real estate. Flaherty refinances. Location, location.

Multi-housing news, online:

Sep. 16, 2014 - TODAY’S DEALS:
Allianz Provides Permanent Financing for Class A Cincinnati Asset

Cincinnati—HFF has arranged permanent financing for The Boulevard at Oakley Station, a 302-unit, Class A community located in Cincinnati. The borrower, an affiliate of Flaherty & Collins Properties, secured a 10-year, 4.14 percent fixed-rate loan through Allianz Real Estate of America Inc. Proceeds were used to retire an existing construction loan.

“Early this year, while Boulevard at Oakley was just beginning its lease-up, Flaherty & Collins decided that they would like to hedge their interest rate risk,” says Dave Keller, senior managing director at HFF. “Allianz recognized the quality of the asset and location, and offered a competitive and compelling forward-rate lock loan structure. Flaherty & Collins did the rest by conducting a very successful lease-up campaign.”

The apartment community is located within Oakley Station, a 74-acre mixed-use development that features a planned 225,000 square feet of retail, including the nation’s largest Kroger grocery store, as well as 350,000 square feet of office space and a 14-screen Cinemark movie. Built in 2013, amenities at the property include a heated saltwater pool, billiards room, grilling area, fire pit, bocce ball court, clubhouse, gaming lounge, tanning bed, fitness center with yoga studio and a screening lounge.

Flaherty has not arranged permanant financing like that to take the City of Ramsey off the hook at Town Center. Or has it? Reader help on that question would be appreciated. They re-fi some stuff, not all? Some are second class?

I suppose the long-term financing market varies location to location.

Same online site, "Dec. 2, 2011 -- 6 Things to Consider Before Purchasing Non-Performing Notes." An interesting article. Presumably Flaherty's note, whatever its terms, with the first secured position on the Ramsey rental thing is not non-performing. However, that does not negate a possible note purchase, say by a local deep pocket player, banking either on being paid off if the note is purchased and it performs, or having foreclosure rights against the City, on its credit terms with Flaherty, and regarding other junior position holders.

As the cited item indicates, a note purchaser might want to buy a note to be able to run the show, or at least have a voice to be heard, which would be the case of one holding the main creditor position. That would be true anywhere.

Not that it has happened, or will or might happen, in Ramsey or anywhere else impacting Flaherty business. There is no indication I know of that way. Just an interesting theoretical thought. If there were such a local buyer, and if the note is performing and hence not discounted, the six point checklist still makes sense and the performance status of the debtor would affect cost, but other risk would still need attention.

It just is an interesting hypothetical. People always able to negotiate with a bank as long as the debt has no restrictions on assignability. All it takes is money enough to play in that league. Who in Ramsey has that?

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