Apollo, Deutsche Bank Finance Silvercup Studios Buy With $323M Loan
Apollo closed $1.1 billion in loans in the third quarter.
By Cathy Cunningham November 9, 2020 8:30 am
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Funds affiliated with Apollo Global Management (APO) and Deutsche Bank are the lenders behind Hackman Capital Partners and Square Mile Capital Management’s purchase of Silvercup Studios, Commercial Observer has learned.
Of the $323 million financing, Apollo funds provided $223 million and Deutsche Bank $100 million.
The deal is part of a robust third quarter for Apollo. The lender racked up $1.1 billion in originations, including a $275 million floating-rate mortgage for Silverstein Properties’ acquisition of U.S. Bank Tower — a deal that marked the landlord’s first foray into the L.A. market.
“We had previously done a number of financings for the equity group in partnership with Deutsche Bank, and so it made sense to partner with them again,” Scott Weiner, senior partner and head of Apollo’s commercial real estate debt business, said of the Silvercup deal.
“We’re familiar with studios and have spent a lot of time in the space,” Weiner added. “It’s really a premier studio. COVID obviously had an impact, so that was part of the underwriting because clearly — with lockdowns — shows were not being filmed. But, we think long term, given the race for content and the studio’s location, it makes sense. Sponsorship is great in terms of their ability to operate these assets and relationships that they have.”
The film and TV studio platform encompasses 23 separate studios across three locations in Queens and the Bronx. CO first reported that Square Mile and Hackman Capital were in talks to buy the iconic property back in June, and the deal closed September 30.
“When COVID hit, we closed the deals that we were working on then took a little bit of a pause to manage our portfolio,” Weiner said. “We started to really see a pickup in activity in May or June. Deals don’t close overnight, so it took a little while to rebuild the pipeline, which resulted in the closings in the third quarter, which amount to over $1 billion. That pipeline continues to build, as we probably have another couple of billion in closings lined up, and look to continue to grow that.”
The biggest deal of the quarter for Apollo was its $274.9 million floating-rate acquisition loan for Silverstein’s acquisition of U.S. Bank Tower, a 72-story 1.4-million-square-foot office property in Downtown L.A. The deal closed September 15.
“We believe in office, long term, Weiner said. “We’ve tracked the Downtown L.A. market for years and we looked at this property as a value that was very much reset by COVID. We also think Silverstein and their partners got a very good deal on it. I think they weren’t necessarily the highest bidder, but were able to buy because of certainty.”
Apollo has financed Silverstein previously. “We think very highly of them, and given this was their first move into L.A., we felt that they had done their homework,” Weiner said. “For us, we liked the basis, and we don’t need the property to be 100 percent occupied for the deal to work. So, our approach was that we had the capital and thought it would be an attractive deal for us.”
Other third quarter transactions included a $148.3 million floating-rate mortgage loan on L Seven, a multifamily property in San Francisco owned by Brookfield (BN) Properties and AIG; a $100 million, fixed-rate senior mezzanine loan, as part of a refinancing of Brookfield and Qatar Investment Authority’s One Manhattan West; and a $50 million mortgage for Potamkin Development’s renovation and expansion of an industrial property in Harlem, New York.
As for opportunities Apollo is looking at as 2020 draws to a close, “I would say Apollo is certainly out looking in the U.S., Europe and Asia for distressed opportunities and recapitalizations within real estate, the corporate world and everything in between,” Weiner said. “There hasn’t been as much distress as people expected in the U.S., although, obviously, hotel and retail are the hardest hit in terms of property types. But, Apollo is really looking at everything.
“With respect to the balance sheet CRE lending business, we’ve closed hotel deals and retail deals, we’re looking at office deals, industrial and self storage, and mortgage, mezz and construction financing. We take a deal-by-deal approach; we’re looking at construction financing. While we have a lot in New York, and we’ve added to New York with Silvercup and some other deals, we’re continuing to look at other major markets like Chicago, San Francisco and L.A.”
