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Thursday, 03 January 2013

Buchanan Street Partners Gears Up to Lend

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Commercial Real Estate Direct Staff Report

Buchanan Street Partners is re-starting its senior bridge and mezzanine lending program and aims to write up to $750 million of loans this year.

The Newport Beach, Calif., investment manager also remains active buying value-add properties in select markets, such as Phoenix, Houston, Las Vegas, Denver and California, many of which it's attracted to because of their nascent recoveries and positive fundamentals.

It manages capital on behalf of separate and commingled accounts, including Buchanan Street Fund VI, through which it was aiming to raise some $600 million.

Last year, Buchanan Street raised some $250 million of capital through a separate account that would be invested in mezzanine debt investments. And it's raised other capital to fund both debt and equity investments.

Buchanan Street has been involved in some $10 billion of debt transactions over the years, but like others had stepped to the sidelines in recent years. It restarted its lending program last year.

Like other mezzanine lenders, Buchanan Street will offer to write large loan packages of, say, 75 percent of a property's value. It then would sell off a senior piece of the debt that would equate to a 50 percent loan-to-value ratio and keep the remainder, which would be comprised either of a subordinate or mezzanine loan.

And it will provide first mortgage bridge loans that would help a prospective buyer quickly complete a transaction, or provide financing for the purchase and turn-around of a property. Those loans could go up to 85 percent leverage, but would likely come with some sort of equity participation. A relatively low-leverage bridge loan, of say 65 percent LTV, would likely carry a floating rate equivalent to 4.5 percent to 5 percent. Typical bridge loans would have a three-year term and have the option of being extended for up to two additional years.

"We have a broad range of capital," explained Timothy J. Ballard, president of Buchanan Street. That means the company could pursue "senior debt, mezzanine debt and the equity," he said.

In terms of equity, the investment manager has pursued properties that could be viewed as opportunistic plays or value-add plays.

"We're looking for opportunities where we can buy properties that physically are in good shape, but might have leasing or management issues," Ballard said.

The company prefers properties in the western United States and lately has pursued assets in a handful of markets, like Phoenix, Houston and Denver, that are business friendly and have seen job growth and positive space absorption. Adding to those markets' attraction is the fact that they're not very high on most institutional investors' lists.

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



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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners
Private-Label CMBS - FY2014
Inv Bank #Deals Bal $mln MktShr%
Deutsche Bank 27.1  23,479.37 26.3
JPMorgan 18.6  13,752.01 15.4
Wells Fargo 17.2  13,085.05 14.6
Goldman Sachs 9.0  7,896.25 8.8
Citigroup 9.1  7,526.97 8.4

 

 

MOODY'S/RCA CPPI

 

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Top Loan Contributors
Private-Label CMBS FY2014
Lender Vol $mln MktShr%
Deutsche Bank 14,005.13 16.0
JPMorgan 11,440.63 13.0
Wells Fargo 5,849.16 6.7
CCRE 5,750.69 6.6
Citigroup 5,604.13 6.4

 

 

 

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