Dealmaker: MetroGroup Realty Finance Arranges $50M for Two Offices

MetroGroup Realty Finance, Newport Beach, Calif., restructured $50.3 million in debt on Denver and San Antonio office buildings.  

MetroGroup Realty Finance Vice President Scott Botsford arranged the new financing. “Office product in secondary markets throughout the U.S. continues to perform well, especially in high-growth areas such as Texas and Colorado, where job and economic growth are flourishing,” he said. “San Antonio is recognized as one of the most stable regional economies in the U.S. with unemployment rates at historic lows. And the Denver metro has demonstrated consistent economic growth.”

In the first transaction, MetroGroup arranged $29.9 million for Parkway Plaza, an 89,500-square-foot San Antonio office/flex building. The loan included additional advances for tenant improvements and leasing commission.  

In the second transaction, MetroGroup arranged $20.3 million for Highland Place, a130,000-square-foot Class A office building in Denver.

Botsford said sponsor Dornin Investment Group, Laguna Beach, Calif., wanted to take advantage of a low interest rate environment and restructure existing debt to provide future funding for leasing costs. “In both transactions, we recommended pairing a bridge loan and a mezzanine loan,” he said. “This approach allowed us to achieve the desired amount in equity repatriation for the partnership buyout, while at the same time securing a more competitive rate on behalf of the sponsor.”

Both non-recourse interest-only three-year loans came with one-year extension options, Botsford said.

CBRE reported that the San Antonio office market experienced one of the largest declines in vacancy rates earlier this year. The Denver office market finished the third quarter of 2016 with a 12.3 percent vacancy rate, down 59 basis points from one year ago.