Starwood Mortgage Capital & Barclays provide $89M USD in Commercial Mortgage Backed Securities Debt to refinance a six-building collection of medical office assets in Southern California and Miami.
The 10-year, partial interest only loan pays interest at a rate of 4.2 percent, and together with $13.2 million in equity from the sponsor, the debt refinanced $41.3 million worth of existing debt on four properties in California. It also covered a roughly $53.7 million purchase of the remaining two assets in Florida that round out the portfolio as well as leasing obligations and closing costs, as per Fitch analysis.
Of the $89 million, a $60 million controlling A note as well as $10 million in the form of a non-controlling A-2-A note will be securitized in the roughly $700.3 million Barclays-led BBCMS 2020-C8 CMBS transaction. There’s also a $19 million non-controlling A-2-B note that will more than likely be securitized in one or more future transactions.
Starwood’s valuation of the portfolio was set at $148.5 million, indicating an underwritten loan-to-value ratio of just under 60 percent. The lender pegged the portfolio’s net cash flow at $7.3 million, with a debt service coverage ratio of 1.4x.
The portfolio comprises a combined 297,839 square feet and is 96.2 percent occupied. The two largest properties in the bundle are the 82,753-square-foot Galloway Medical Park in Miami (representing 24.4 percent of the loan amount) and El Camino Real, a 74,124-square-foot property in Encinitas, Calif. that was renovated last year and is 88.5 percent leased — the lowest of the properties in the portfolio. The El Camino Real property represents 35.2 percent of the total CMBS loan amount.
The four California assets, which comprise almost 53 percent of the portfolio’s overall rentable area, were purchased by the borrower as distressed assets from 2013 to 2018.