Merced, CA, July 23, 2015 --(PR.com
)-- Earlier this month, Altoma Real Estate Advisors LLC, a commercial real estate mortgage intermediary specializing in exceeding expectations, wrapped up their second quarter by closing a "hometown" loan in Merced, CA. It was the second loan closed in Q2, and it was preceded by a loan in Portland, OR, marking Altoma's second loan closed in Portland this year.
In relation to the Merced closing, Altoma Principal Dean Sparks said, "It's always nice to do a deal on a property that you know very well. I've visited the retail shops and watched movies in the theater at this property going back almost 10 years. At that level of optics, we were able to get especially granular with our presentation, which always helps when financing theaters, because absent of long lease terms and investment grade credit, a theater isn't the easiest of product types to finance."
The first loan closed in the second quarter was on a 94.5% occupied, 30,778 NRSF Class B retail strip center in a sub-market of Portland, OR. The client's goal was to extract a very healthy amount of cash out of the property via high leverage, using a loan featuring favorable assumption clauses. Challenges in the deal consisted of tenants on the "difficult" side for passing a Phase 1, including a gas station, lube shop and dry cleaner. Loans with this tenant profile are traditionally "bank" deals with recourse, though Altoma was able to lean into a deep relationship with a securitized lender, who was able to achieve b-buyer sign off early into the process. B-buyer sign off was in light of the ESA recommendation for a Phase 2, which was circumvented with environmental insurance. The 72.8% LTV, $5,900,000 non-recourse loan closed at 4.33% fixed for 10 years with 24 months IO, and amortizing 30 years thereafter. The client is optimally set-up to sell the property within the first few years of the term in an accretive transaction to the new buyer, who can benefit from the low fixed rate in a rising rate environment.
The second loan placed and closed by Altoma in the second quarter was a 100% occupied, 57,419 NRSF Class B theater anchored retail center in Merced, CA. As a long term holder, the client's goal for this transaction was a neutral balance refinance of the maturing loan, which was 2005 vintage CMBS. The difficulties inherent in this deal were evident at the outset, including the theater anchor rolling at midway into a 10 year term, two MTM tenants, two tenants locked into a multi-year lease paying rents well below market, and a challenging economic environment in Central California that gives way to headline risk. Altoma solicited over twenty lenders to source three quotes. Two of those three had a hard back stop on 25 year amortization, while one other was willing to go out to 30 years on account of Altoma's highly bullish recommendation for the property and sponsorship. The 70.6% LTV, $5,800,000 non-recourse loan closed at 4.77% fixed for 10 years with 30 year amortization. It was imperative on this transaction for Altoma to showcase the anchor tenant's sales compared to peers in "like-kind" markets, as their sales are well below average when compared to larger markets.
Altoma is presently preparing to close or is out to market on multiple transactions ranging from $4,000,000 to in excess of $40,000,000 spanning from the Midwest to the West Coast. They have been able to source and execute on deals in the market amid voracious competition from well known companies with long tenure in the industry. Of that competition, Altoma Principal Dean Sparks said, "We are especially proud of our ability to mitigate the challenges of a lesser known name and smaller stature in the industry with good old fashioned 'hard work and hustle'. It takes clients who are willing to give us a chance and lenders who are willing to listen. Fortunately, we've found plenty of each, and in the end, our clients win."
About: Altoma Real Estate Advisors LLC is a commercial real estate mortgage and capital markets intermediary based in California. Founded by Dean Sparks in 2012, Altoma started focusing solely on CRE debt placements by 2014, and quickly established themselves as an "outlier." Altoma advises on financing's from $1mm to no ceiling, in all CRE asset classes, and in every investment profile. Their clients range from large developers and operators to principals with a single asset.