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Wednesday, 17 November 2010

Home Properties Refinances to Take Advantage of Low Rates

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Commercial Real Estate Direct Staff Report

Home Properties is replacing the bulk of its debt that matures next year with mortgages at rates that average 4.5 percent - 1.5 percentage points less than the average for the in-place debt.

"We will refinance at rates... as low as we have ever seen," David P. Gardner, chief financial officer of the Rochester, N.Y., REIT, said at the National Association of REITs' REIT World 2010 conference in New York this week.

The company as of the end of the third quarter had obtained $184 million of fresh debt to replace part of the $298 million of mortgage maturities it faces next year. And Gardner said it would refinance another $46 million of the maturing debt before the end of the year.

Home Properties had also obtained take-out financing for $125 million of its $146 million in debt maturing in 2010, as of Sept. 30, and had an application pending for replacement debt for the remaining $21 million.

Much of the fresh debt has been written at 75 percent loan-to-value ratios, higher than the leverage level of the maturing debt.

Excess proceeds from the refinancings would be used for acquisitions. Edward J. Pettinella, the company's chief executive officer, said Home Properties plans to invest $250 million in acquisitions over the next 12 months.

It focuses on buying C-class properties and upgrading them to B-class. Its key geographic targets are major metropolitan markets in the Northeast and Mid-Atlantic regions.

It typically buys properties that charge monthly rents of about $900/unit and upgrades the units to levels that command rents of about $1,600/unit. Pettinella said rates in that vicinity have been attractive during the recession, while renters have been disinclined to pay higher luxury-property rates.

The REIT's occupancy rate has held at 95 percent over the past two years.

The spigot for transactions has begun opening in recent months, Pettinella added. Home Properties has invested $230 million in acquisitions since May, after not buying anything in the first quarter or last year. Its recent deals include the $70.1 million acquisition of the 364-unit Courts at Fair Oaks in Fairfax, Va., from an affiliate of Pantzer Properties Inc.

Comments? E-mail John Covaleski or call him at (267) 247-0112, Ext. 208.



Copyright © 2010 Commercial Real Estate Direct www.crenews.com

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“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

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Additional Info

  • Syndicate to Realpoint: No
  • Subject: Mortgages/Financing (MOR), REITS -general (REITS)
  • Deal Name: Bear Stearns Commercial Mortgage Securities Trust, 2006-PWR12
  • Company: Host Marriott Corp.
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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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