2002 Transactions
Tremont Arranges $55,100,000
Financing for Industrial Portfolio
Tremont Realty Capital arranged the financing for the acquisition
(from multiple sellers) and roll-up of 23 border industrial
properties located primarily in Texas and New Mexico. The
$55,100,000 financing represented 90% of the acquisition
costs. The financing was comprised of three components:
a $48,350,000 senior loan bifurcated into an A and B piece
and a $6,800,000 mezzanine loan.
Managing Director, David Ross and Executive Director, Rick
Gallitto, both with Tremont Realty Capital's Boston office,
were engaged by the borrower, Santa Teresa Realty Trust
(STRT) to arrange the acquisition/roll-up financing. Ross
and Gallitto structured the transaction with a securitizable,
investment grade A-piece of the senior loan and brought
in an affiliate of Tremont Realty Capital to fund the B-piece
of the senior loan, as well as the $6,800,000 mezzanine
loan. The loan was structured as a floater to take advantage
of today's low rate environment and to allow the borrower
time to optimize the tenant and lease profile within the
STRT portfolio. David Ross commented, "One of the main
challenges in obtaining the high leverage financing was
finding capital providers that would spend the time to familiarize
themselves with the subject portfolios strong border industrial
markets. Once capital providers educated themselves about
these markets, they became believers and then the deal became
a structuring game." Rick Gallitto noted, "Our
ability to arrange 90% leverage on an undertaking such as
this is directly related to the capital market's increasing
sophistication and ability to separate one financing transaction
into different risk and pricing tranches. In this transaction
we used three tranches to achieve our client's objectives."
STRT was happy to achieve 90% leverage on the portfolio
and close the deal in one financing transaction (rather
than multiple transactions) within the time and due diligence
constraints dictated by some of the sellers.
For additional information on this transaction, please contact:
David Ross
Managing Director
Email: dross@tremontcapital.com
Phone: 617.867.0700 x773
Richard Gallitto
Executive Director
Email: rgallitto@tremontcapital.com
Phone: 617.867.0700 x772
