CBRE Gets $61M Refi for 3 Nestlé Buildings in Tampa

February 13, 2012
By Barbra Murray, Contributing Editor

A 2.2 million-square-foot industrial and office portfolio, leased in its entirety to Nestlé USA Inc., has been refinanced to the tune of $61 million, courtesy of a transaction orchestrated by CBRE Capital Markets.

Acting on behalf of Toronto, Ont.-based H&R REIT, CBRE landed a 10-year loan featuring a 10-year amortization schedule and a 4.5 percent interest rate, through ING Investment Management.

The group of Class A assets includes an 860,900-square-foot industrial office/warehouse building in Dekalb, Ill.; a 782,600-square-foot cross-dock distribution warehouse in McDonough, Ga.; and a 524,300-square-foot industrial facility in Fort Worth, Texas.

A fully leased, Class A portfolio usually attracts lenders’ attention; however, despite the creditworthy tenant name taking up all the space on all three rosters of the H&R properties, options for refinancing the portfolio proved relatively limited. It was an issue of timing. Two of the assets had just gone into their option period of five years, while the third building had seven years remaining.

“In our world of finance, having 700,000 and 800,000-square-foot distribution centers with a single tenant and five years left, you won’t line up an incredible amount of lenders because of the short maturity level,” Michael Strober, a senior vice president with CBRE, told Commercial Property Executive. “We identified a small group of life companies who like to amortize their deals very rapidly, so this is perfect for them. But to say that there was a large group of lenders interested in short-term maturity leases for a single-tenant portfolio, no.”

What the portfolio may have lacked in maturity, it made up in sponsorship. There’s nothing like the right kind of borrower to ease lenders’ apprehensions, and H&R turned out to be the right kind. The open-ended REIT owns a 43 million-square-foot, North American commercial real estate portfolio valued at approximately $5.9 billion, and focuses on long-term leases to creditworthy tenants. And, being a Canadian company didn’t hurt at all.

“Lenders are absolutely in love with the Canadian investors,” Strober said. “The Canadian investors, over the last couple of years, have come into the United States in a very strong manner because of the fluctuation in our money. It’s much more expensive to buy trophy properties in Canada right now, so these public companies and these investors have come across the border, bringing cash. You’ll find that they can afford to purchase large trophy properties and yet leverage it on a minimal basis, normally 50 to 60 percent. So they are truly being sought after by our portfolio lenders in the United States.”

With CBRE’s assistance, H&R has been capitalizing on lenders’ fondness for borrowers north of the border. In January CBRE closed a $250 million loan for H&R’s $442.5 million purchase of Houston’s 845,000-square-foot Hess Tower, occupied in its entirety by the Hess Corp. And last November, the firm arranged $250 million in acquisition financing for the REIT’s $415.5 million acquisition of Two Gotham Center, a 661,000-square-foot tower leased by the City of New York in Long Island.

*This story was updated at 7:14 a.m. on Feb. 14, 2012, to clarify Strober’s comments.