Commercial Real Estate Loans & Investment Sales

AAA Tenant

A tenant with a top credit rating. This type of tenant is often critical to the developer’s ability to arrange both construction and permanent financing for a major commercial project, such as a shopping center or office building. See our full commercial real estate financing related glossary of terms.

Court Buttresses Eminent Domain

Article by Jesse Bravin via RealEstate Journal

The Supreme Court gave local governments broad rein to take private property for economic development, ruling that transferring land to private investors for projects promising to bring jobs or commerce was a public use akin to building a park or paving a road.

The 5-4 decision lifts a cloud over redevelopment projects across the country that hinge on local authorities using eminent-domain powers to assemble parcels for private investors to develop commercially. Several projects could lead to the condemnation of property for conversion to shops or other uses that will feed off the primary development. The threat of condemnation, developers say, encourages holdouts to sell.

The court's ruling came in a case out of New London, Conn., a depressed manufacturing city whose economic hopes were buoyed in 1998 when New York drug maker Pfizer Inc. announced plans to open a research facility there. City authorities proposed to redevelop the adjacent residential Fort Trumbull neighborhood to capitalize on Pfizer's presence, including a hotel and a pedestrian "riverwalk." Most landowners sold willingly. Nine refused, and the city condemned their property.

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For information about commercial real estate, contact Pacific Security Capital at 1-800-844-6085.

Base Closures: Redevelopment Boon Or Bust?

Article by Parke Chapman Via National Real Estate Investor:

With the Department of Defense shutting down military bases across the nation, commercial real estate developers are investigating potential redevelopment sites. As many as 33 major bases will be closed while another 29 bases will be “realigned,” which in military shorthand means they will absorb more staff. Meanwhile, the shuttered bases should save the government a whopping $50 billion over the next 20 years.

The government cost-cutting benefits are clear, but are base redevelopments worth the headache for developers? To be sure, decommissioned military bases offer unique risks and rewards for any developers bent on reinventing them.

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For information about commercial real estate, contact Pacific Security Capital at 1-800-844-6085.

Pacific Security Capital Appoints Theddi Chappell as Director of its Commercial Real Estate Advisory Services Group

Commercial real estate investment bank, Pacific Security Capital, continues to expand its Commercial Real Estate Advisory Services Practice.

Beaverton, OR, -- June 16, 2005 – http://www.pacificsecuritycapital.com -- Pacific Security Capital (“PSC”), a leading commercial real estate investment bank, headquartered in Beaverton, Oregon, announced today that it is continuing to expand its commercial real estate advisory services practice by hiring new Director, Theddi Wright Chappell.

Ms. Chappell is a LEED Certified Professional with extensive experience in both national and international investment analysis and consulting services, having worked on projects throughout the US, in Canada, Europe, and Australasia.

"We are very pleased to have acquired the services of such a well respected professional,” said Mike Myatt, Executive Managing Director of Pacific Security Capital. “In addition to working with our domestic clients, Theddi furthers our commitment to support our international clients through her former experience as Managing Director for Landauer Australia.”

Pacific Security Capital’s commercial real estate advisory services practice offers the following services in North America and the European Community:

• Market and Economic Feasibility Studies;
• Asset, Market or Loan Research;
• Letters of Opinion and Fairness Opinions;
• Risk Management Analysis and Strategy;
• Owner’s Representation Services;
• Strategic Planning for Properties and Portfolios of Properties, and;
• Financial Engineering and Modeling Services.

“Through Pacific Security Capital’s international platform and vertically integrated solutions, our commercial real estate advisory services practice is growing at a very rapid pace," said Myatt. “In today’s competitive investments sales market, our clients find that they are in need of quality research and information more than ever.”

To learn more about Pacific Security Capital or PacificEliteTM please visit www.PacificSecurityCapital.com or call 1-800-844-6085

About Pacific Security Capital Pacific Security Capital is a leading commercial real estate investment banking firm providing commercial real estate loans, structured finance, investment sales and advisory services. The combination of direct lending, advisory, intermediary, corporate and professional services, syndication and acquisition services consistently allow PSC to rank among the leaders in the industry. PSC is headquartered in Beaverton, Oregon with other offices in major markets in North American and Europe. More information about the company can be found at www.PacificSecurityCapital.com.

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For information about commercial real estate advisory services, contact Pacific Security Capital at 1-800-844-6085.

Drowning in Data

Article by Parke Chapman Via National Real Estate Investor

Commercial real estate is swimming in data, thanks chiefly to the decade-long rise of public REITs and the growth of the commercial mortgage-backed securities (CMBS) markets. As a result, legions of analysts and data gatherers now provide a steady flow of information about occupancies, asking rents, sales per square foot, and so on — for all markets and classes of commercial real estate.

The idea is simple: reliable data and research lures capital since it gives money managers and others a complete picture of what they're buying. The word for this is transparency.

Full article >

For information about commercial real estate loans, contact Pacific Security Capital at 1-800-844-6085.

Investors Bid Up Office-Space Prices

Article by Sheila Muto Via RealEstate Journal:

Foreign and institutional investors are bidding up prices for office properties in the nation's biggest markets, paying more than private investors and real-estate investment trusts are willing to offer, a real-estate research firm says.

Los Angeles, New York, San Francisco and Washington, D.C., are among the areas where foreign and institutional investors have been the most active in the past year. Competition for office properties has been fierce in those markets among all investors because of strong or improving leasing activity and rising rental rates.

Full article >

For information about investment sales, contact Pacific Security Capital at 1-800-844-6085.

City-Building in Phoenix

Article from Retail Traffic:

The gold rush is on. Developers are racing to build new residential and commercial projects to meet what is expected to be a doubling in the region's population in the next 15 years. But they aren't plowing ahead blindly. Instead, the term "city-building" gets thrown out a lot. Developers in different disciplines are working together. The result is that Phoenix's growth will be through construction of a dozens of master-planned communities spreading West and North of downtown.

Westcor, which has long made Phoenix its home, is positioned at the heart of the growth and has its hands in nine projects around the city. The company has more than 2,000 acres of commercial development slated around Phoenix. David Scholl, senior vice president of development for Westcor, offered the development of the Irvine Ranch in Calif., into a city that now houses 170,000 residents, as a loose example for what Westcor is looking to achieve. But even that's not a perfect fit since the ranch covers 120,000 acres.

For information about commercial real estate finance, contact Pacific Security Capital at 1-800-844-6085.

Commercial Real Estate Investment Bank Provides $52 Million Commercial Loan

Pacific Security Capital Finances Fractional Resort in California

Pacific Security Capital, a Commercial Real Estate Investment Bank, has provided a $52 million construction loan for a fractional resort in California.

Beaverton, OR, June 6, 2005 – http://www.pacificsecuritycapital.com – Pacific Security Capital, a leading provider of commercial real estate loans, structured finance, investment sales and advisory services announced today that it has provided a $52 million construction loan for a fractional resort in California.

The commercial loan will allow Pacific Security Capital’s client to finance the acquisition, development and construction of the project.

“The challenge with this commercial loan was to provide a competitive pricing and sizing on a fractional resort property, which is a more speculative asset class within a very specialized niche,” said Michael Wenzlick, Senior Managing Director of Pacific Security Capital.

“Working in a niche vertical within the hospitality/resort asset class and still being able to provide such competitive pricing and sizing is a testimony of Pacific Security Capital’s ability to execute and add value and is precisely the reason why this sponsor chose to engage us for a commercial loan,” said Mike Myatt, Executive Managing Director of Pacific Security Capital.

To learn more about Pacific Security Capital or PacificEliteTM please visit www.PacificSecurityCapital.com or call 1-800-844-6085

About Pacific Security Capital
Pacific Security Capital is a leading commercial real estate investment banking firm providing commercial real estate loans, structured finance investment sales and advisory services. The combination of direct lending, advisory, intermediary, corporate and professional services, syndication and acquisition services consistently allow PSC to rank among the leaders in the industry. PSC is headquartered in Beaverton, Oregon with other offices in major markets in the United States and the European Community. More information about the company can be found at www.PacificSecurityCapital.com.

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Is this the year of Goldilocks in commercial real estate?

Economists refer to a “Goldilocks economy” as one that is neither too hot, nor too cold. Bob Bach, national director of market analysis for Grubb & Ellis, describes 2005 as the year of Goldilocks in the commercial real estate industry. “Economic growth is going to be strong enough in 2005 to propel the leasing market forward, but not so strong as to cause enough of a spike in interest rates that would disrupt the investment market.”

Bach's remarks, which came during a recent Grubb & Ellis Investment Client Conference at the Mandarin Oriental hotel in Miami, preceded a panel discussion moderated by NREI that focused on investment trends.   Full article at National Real Estate Investor

For information about commercial real estate finance, contact Pacific Security Capital at 1-800-844-6085.

How Corporations Can Use Real Estate To Access Untapped Capital

Most corporations of any size and scale have large investments in the land and facilities necessary for the successful operation of their business. While making corporate investments into real estate assets may seem to be a reasonable strategy at first glance, they are rarely investment or capital driven decisions, but rather operating decisions that in retrospect usually fail to maximize the leverage and value of their land and facilities beyond what is typically provided for within traditional ownership and financing structures.   

When an operating business finds itself in need of low cost capital their corporate real estate assets should be evaluated as a source of readily accessible quality capital. While a number of financially engineered solutions are available to maximize corporate real estate assets the most commonly used structures center around Sale Leaseback transactions. Sale Leaseback transactions are popular solutions for the following reasons: 

Improved Financial Statements: By moving corporate real estate assets “Off-Balance Sheet” financing solutions are engineered that create no mortgage or other indebtedness to be carried as debt on your company's balance sheet. The immediate boost in cash without offsetting debt can improve the overall financial health of a business. Book income typically increases in the transaction's early years, with rent payments less than the interest and depreciation under conventional financing. With our solutions, the book value of company assets is effectively understated — enhancing your company's Return on Assets (ROA).   

Financial Flexibility: Corporate real estate transactions are not bound by formalized loan industry or REIT requirements, giving lenders flexibility to meet the operating needs of your business. Rents can be fixed for the full lease term without inflation adjustments or any percentage rent. Rents can also be stepped to be lower in the early years or reset periodically to take advantage of improved credit, interest rates and other conditions. We can also address unexpected financial and business contingencies.   

Operational Control:  Most lenders offer programs that will allow you to retain complete operational control of the property for as long as it is required in your business. 

Low After-Tax Cost:   The lease payment under a sale leaseback structure is fully deductible over the lease term, making the after-tax cost to your company less than with alternative forms of asset-based financing and less than the market rent you would typically pay. For federal income tax purposes, a company can only depreciate buildings and other physical improvements, but not land. Most sale leaseback solutions factor the value of the land into the rent. The rent is fully deductible, effectively enabling you to depreciate the cost of the land. 

Credit Tenant Property Can Provide Similar Financial Benefits To the Issuance of Corporate Bonds:  If a business is deemed to be a credit tenant or its financial equivalent its corporate real estate assets can be effectively be used to secure management-free cash flow with exceptional liquidity and high leveragability performing like corporate bonds while preserving the benefits that real property offers. Because of the secure character of credit tenant property investments, properties can be leveraged far more highly than traditional real estate.  Based on the lease guarantee by the tenant, non-recourse financing may be arranged with a 1.0 debt coverage ratio, llowing for financing Up to 100% loan to value.   Income from an investment grade tenant over the length of a multi-year lease offers reliable returns comparable to those of corporate bonds.  Credit tenant leases are usually written for terms ranging from 10 to 25 years.  Lengthy terms eliminate concern about tenantturnover normally associated with real estate ownership.

Near-Zero Volatility : Many of the corporate real estate programs today offer fixed rent structures providing full inflation protection. Because the key value determinant of credit tenant property is the long-term corporate guarantee, this asset does not experience the cycles affecting other real estate markets.  Long-term, highly leverage financing removes interest rate risk and minimizes pricing volatility.  Circumstances affecting traditional real estate, such as changes to surrounding property, local politics and market swings have little impact on credit tenant property values.   

Liquidity: The long-term corporate guarantee of rental income and expense coverage combined with the tenant-based financing enable corporate real estate assets to be traded with exceptional liquidity not typically associated with real property. Most lenders will allow businesses to convert existing fixed real estate assets into cash at fair market value at what may be a premium over book value. Funding can also be used for new construction including the cost of the land acquisition. Proper use of corporate real estate as a financing tool will eliminate the need for a business to tie up capital or credit in land or buildings.

A wide variety of sale leaseback structures are available from lenders who have a practice area dedicated to corporate real estate finance. When developing your capital formation strategy make sure you evaluate corporate real estate assets as a viable vehicle for accomplishing your goals.

Mike Myatt is Executive Managing Director of Pacific Security Capital, a leading commercial real estate investment banking firm providing commercial real estate loans, structured finance, investment sales and advisory services. Contact Pacific Security Capital at 1-800-844-6085

Tags: commercial real estate loans, sale leaseback transactions, corporate real estate