Dealmaker: MetroGroup Secures $21M for Industrial, Manufactured Home Assets

MetroGroup Realty Finance, Newport Beach, Calif., secured $21.2 million for industrial and manufactured home assets in Hawaii and California.

In Kihei, Hawaii, on Maui, MetroGroup secured $7.5 million in acquisition financing for Kihei Commercial Center, a multi-tenant industrial/flex complex. Vice President Scott Botsford arranged the financing.

“This transaction presented our client with an opportunity to reposition a business park that was initially built and marketed as for-sale units, but the balance of the units ended up leased due to slowing sales,” Botsford said. “To secure competitive financing, MetroGroup presented its lenders an integrated dual valuation and the sponsor’s dual business plan and exit strategy.”

Botsford said by demonstrating the sponsor’s previous history and experience with this type of planned unit development, MetroGroup structured a loan that provided release prices on units if sold while continuing to provide long-term fixed-rate protection on units that were kept for lease. The 10-year loan bears interest at 3.85 percent, Botsford noted.

The center consists of three 90-percent occupied buildings. The property at 300 Ohukai Road in Maui County is 20 percent sold and 80 percent leased to industrial, office and retail tenants.

In Santa Rosa, Calif., MetroGroup Vice President J.D. Blashaw secured $13.7 million in permanent refinancing for Mountain View Mobile Estates, a 109-site manufactured home community. He arranged the early refinancing in an agency execution with Freddie Mac for MV Estates LLC, Orange County, Calif.

“The sponsor sought to take advantage of the current interest rate environment through an early refinance,” Blashaw said, noting the sponsor’s existing loan would have matured in early 2018. “Interest rates have remained historically low for the last several years and have only recently begun to slowly inch upward. This has resulted in an influx in refinance activity and early refinancing as property owners and investors are seeking to lock in rates now, while they remain historically low and in anticipation of future increases.”

Blashaw said most loans currently approaching maturity were underwritten at the height of the market, when interest rates were in the mid-5 to mid-6 percent range, “meaning that while interest rates are anticipated to rise, loans refinanced today are often financed at lower rates than when initially originated.”

MetroGroup secured a 10-year non-recourse loan for the property.

“The sponsor was also able to negotiate rent control-exempt long-term leases at the property, which resulted in a significant increase in rental revenue,” Blashaw said. “We were able to strategically demonstrate this value to lenders, structuring the loan in a way that met the sponsor’s objectives, while also achieving a very competitive interest rate, reducing any future refinance risk.”