Commercial Real Estate Direct Staff Report

American Realty Capital Trust IV Inc., a non-traded REIT that started raising capital only five months ago, has hired Bank of America Merrill Lynch as financial adviser to help it evaluate strategic alternatives.

The REIT would be the latest sponsored by AR Capital to undergo a liquidity event. If it proceeds with such an event, which could entail a listing of its shares on a major exchange or a sale of itself or its portfolio, it would mark the shortest full cycle, by far, of a non-traded REIT. AR Capital started raising equity for American Realty IV only last June.

Typically, non-traded REITs tell investors that they'll aim for such an event to occur in seven years.

But AR Capital has been raising capital on American Realty IV's behalf at a torrid pace. Since getting the regulatory green light to raise capital, it has raised the $1.7 billion of equity it targeted, for a whopping average of $154.5 million per month. It has sold shares for $10 each and takes a hefty 10 percent cut to cover broker-dealer fees and sales commissions.

Part of the reason for its success in raising capital is that it's been able to provide its investors with liquidity in relatively short order. Its former flagship REIT, American Realty Capital Trust Inc., started selling shares in 2008 and four years later listed its shares. Earlier this year, it was sold to Realty Income Corp. in a $3 billion deal.

And AR Capital's American Realty Capital Trust III Inc. earlier this year was sold to an affiliated entity in a $2.2 billion deal.

American Realty IV would join a growing list of non-traded REITs planning liquidity events. Most are taking advantage of a hospitable stock market. The latest to execute one was Chambers Street Properties, the former CBRE Realty Trust, which today listed its shares on the New York Stock Exchange.

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.

Commercial Real Estate Direct Staff Report

Fannie Mae has priced a $1.02 billion commercial mortgage bond transaction under its Guaranteed Multifamily Structures, or GeMS, program, marking the sixth such deal of the year.

The transaction brings the agency's issuance under GeMS so far this year to $5.1 billion, putting it on pace to exceed the $10 billion it issued all of last year.

Under the GeMS program, the agency and its underwriters bundle Fannie mortgage-backed securities into bond structures with varying average lives and coupons in response to investor demand.

Lead manager for the latest issue, FNA, 2013-M7, is Goldman Sachs. Co-managers are Credit Suisse and Wells Fargo Securities.

As has become custom for Fannie's GeMS deals, its underwriters split the collateral pool in two. One component is comprised of 61 mortgage-backed securities, each of which is secured by an individual loan, with a balance of $428.1 million that had 10-year terms, but have seasoned for an average of 71 months. They have a weighted average coupon of 5.715 percent, weighted average loan-to-value ratio of 61.7 percent and debt-service coverage ratio of 1.84x. They are tied to the deal's ASQ1 and ASQ2 classes as well as the X1 interest-only class.

The other component is comprised of 114 10-year loans with a balance of $593.1 million that have seasoned for an average of only six months. They have an average coupon of 3.851 percent, LTV of 65.6 percent and DSCR of 2.05x.

Following are pricing details for the transaction:

*Notional amount, interest only

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.

TreeTop Development is said to have agreed to buy Saxon Hall, a 417-unit apartment property in the Rego Park section of Queens, N.Y. The Newark, N.J., company is buying the property, at 62-60 99th St., from a venture of Vantage Properties and Lubert-Adler Real Estate Funds. It's expected to sell for up to $85 million, or $203,837/unit.

Commercial Real Estate Direct Staff Report

Cofinance Group has tapped HFF to line up fresh equity and mortgage financing for a portfolio of six grocery-anchored shopping centers with 703,287 square feet in upstate and western New York.

The Luxembourg company bought the portfolio in 2010 in a venture with Cole Real Estate Investments for $43 million. But Cole is now is aiming to exit the investment. So Cofinance is looking to replace its equity.

It hopes to raise about $14.4 million from a new equity partner and $31.85 million of mortgage financing, valuing the entire portfolio at $49.8 million. It is shooting for a loan with a five-year term and coupon of 4.3 percent.

In offering material that HFF has distributed among prospective investors, it said the portfolio generates $5.3 million of net operating income and was 92.1 percent occupied. That material also said the portfolio would provide an internal rate of return of 19.02 percent for an investor and cash-on-cash yield of 14.42 percent.

The six properties are each anchored by Tops Markets, a New York grocery chain that occupies a total of 334,515 sf in the portfolio. It accounts for 56 percent of the portfolio's effective rent. Its leases run for an average of 14.5 additional years.

The properties in the portfolio, which were constructed between 1986 and 1997, are:

- 658 West Main St., with 65,918 sf in Arcade;

- 270 East Main St., with 63,427 sf in Avon;

- 1796-1808 Lake Road, with 60,488 sf in Hamlin;

- 76-100 Niagara St., with 96,958 sf in Tonawanda;

- Southtown Plaza, with 98,330 sf at 1600 Cedar St. in Elmira, and

- Youngmann Plaza with 318,166 sf at 880 Young St. in Tonawanda. The property's anchor tenants also include a BJ's Wholesale Club, whose lease for 104,232 sf matures in 2015, and Gander Mountain.

Comments? E-mail Josh Mrozinski or call him at (267) 247-0112, Ext. 213.

Ocean Properties Ltd. has paid $19 million, or $633,333/room, for the 30-room Lake Placid Lodge in Lake Placid, N.Y.

The Delray Beach, Fla., hotel owner bought the posh resort from a venture led by Ramsfield Real Estate, which in 2007 had provided $20 million of construction financing to fund a massive redevelopment. Ramsfield had kept a $4 million subordinate piece of the financing and sold the remaining senior portion to Bank of America.

The property then was owned by Garrett Hotel Group, a Burlington, Vt., owner and operator of very upscale resorts. The property's kitchen, main lodge, restaurant and several of its then-34 rooms were severely damaged in a fire. The financing that Ramsfield had provided was to fund the lodge's reconstruction as well as expansion of its meeting space.

But the hotel market's 2008 collapse eventually resulted in Ramsfield taking over the property through a deed-in-lieu of foreclosure. Garrett by then had invested some $40 million in the property, which at the time had achieved five-star status. Ramsfield then restructured BofA's senior loan.

Since then, the hotel's performance has skyrocketed. Revenue per available room has shot up by nearly 54 percent since 2010 to $509. And net operating income has climbed nearly tenfold, to $1.7 million.

The property is affiliated with Relais & Chateaux, an association of 500 exclusive hotels worldwide.

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.

Sonnenblick-Eichner Co. has arranged $59.5 million of financing for the St. Regis Deer Valley condominium complex in Deer Valley, Utah.

The financing was provided by a life-insurance company and is comprised of three loans: a 10-year, fixed-rate mortgage that amortizes on a 30-year schedule and is backed by the property's hotel operations and its common areas; a 10-year mezzanine loan, and a 10-year loan backed by the property's condominium units.

The mezzanine and condominium inventory loans were structured so they could be paid down without penalty.

The resort has 67 condo units that are divisible into 181 hotel rooms and 24 private residences. It was developed by DDRM Greatplace of Anaheim, Calif.

Sonnenblick-Eichner arranged the $212.5 million construction loan for the property in 2007.

The property is at the base of the Deer Valley Ski Resort.

Comments? E-mail Anita Nolan or call her at (267) 247-0112, Ext. 212.