Greystone closed a $36 million commercial mortgage-backed securities deal with Missouri-based Hoffmann Commercial Real Estate to refinance a mixed-use development in Avon, Colo., Commercial Observer can first report.
Ted Nasca, managing director of CMBS originations in Greystone’s Chicago office, worked on the financing, which carries a fixed interest rate over a 10-year term. The loan is interest-only for the first three years with a 30-year amortization period.
The proceeds from the loan are being used to refinance the adjoining properties known as Chapel Square and Benchmark Shopping Center. The properties, which contain retail and office space, sit at the base of Beaver Creek Ski Resort, according to the borrower and lender.
“Obviously, the asset class takes agencies off the equation, so your avenues are either CMBS, a life company or a bank,” said Rob Russell, head of CMBS production for Greystone, who works out of the firm’s New York office. “The sponsor has more experience in the CMBS market, so they preferred that route. The asset is not a typical asset in the sense that Beaver Creek as a town has some seasonality to it.”
Mr. Russell explained that the team was comfortable lending on the asset because it serves as the primary shopping center for both the seasonal and year-round populations in the area. There are also a number of communities within walking distance from the center, he said.
“Working with Greystone was great,” Jon White, president of the real estate holding company Hoffmann, told CO by phone. “They did a very good job of getting us what we felt to be a great deal in the market place. Given where rates are now and where they are projected to be over the next five years, we felt that we had a very advantageous rate.”
The company’s goal was to securitize the debt on the properties within the first 36 months of ownership, said Mr. White. The St. Louis, Mo.-based firm purchased Chapel Square and Benchmark, which total 200,000 square feet, almost two years ago.
“When we bought the asset, we considered it to be distressed. Part of it was bank-owned, and the other part of it was owned by an institution based in Atlanta,” Mr. White said. “When we underwrote the property, the rental rates that were in place were substantially below market. We came in and put it our value optimization plan, where we address deferred maintenance and capital expenditures.”
Mr. White estimates that Hoffman put $8 million or $9 million of equity into the properties, which are occupied by local and national tenants.
The property is 99.7 percent leased to 44 tenants, according to Greystone. Some of the larger tenants include Sports Authority, Wells Fargo Bank, Avon Theatre and Nest Furnishings.
“Greystone is very proud of this because it is the largest retail deal that we’ve done,” said Mr. Russell. “We are more than just a multifamily or healthcare lender.”