Draper and Kramer, Incorporated’s Commercial Finance Group closed more than $100 million in loans for three commercial real estate portfolios comprising about 3.7 million square feet in assets throughout the Midwest. The loans included the refinance of an eight-building industrial portfolio in the greater Milwaukee area; an acquisition loan for a 38-building light industrial portfolio in Chicago’s suburbs; and a bridge loan for a four-building adaptive reuse development in the burgeoning Renaissance District of South Bend, Ind.
The transactions included:
$60 Million Milwaukee Industrial Portfolio Refinance
Perkowski and Matthew Wurtzebach, a senior vice president in Draper and Kramer’s CFG, assembled a $60 million refinance package for an eight-property,1.63 million-square-foot industrial portfolio in the Milwaukee metropolitan area owned by Dallas-based Westmount Realty Capital LLC. All of the properties are near major regional highways and General Mitchell International Airport.
Westmount acquired the underperforming portfolio in 2015. Its management team subsequently implemented a capital improvement program and pushed occupancy to near 100%. Perkowski and Wurtzebach sourced a refinance that allowed the owner to benefit from equity created after its purchase and improvement of the collateral. A national bank provided a non-recourse loan that permits repayment without penalty.
“We were able to secure extremely favorable loan terms by locating a lender that recognized the value that Westmount created,” said Perkowski. “These were improved industrial properties in a market with very low vacancy, offering strong collateral for the lender.”
Acquisition Financing for 1.7 Million-Square-Foot Light Industrial Portfolio in Suburban Chicago
The success of the Milwaukee portfolio refinance led Westmount Realty Capital, along with San Francisco-based Stockbridge Capital Group, to engage Perkowski and Wurtzebach to source an acquisition loan for the purchase of a 38-building, 1.7 million-square-foot light industrial portfolio across four sites in the Chicago area. Bill Barry and David Tomfohrde, both Draper and Kramer CFG senior vice presidents, were also involved in the financing, whose terms are not being disclosed. Nearly half of the portfolio – 21 buildings comprising 757,000 square feet – is located in 47 continuous acres just west of O’Hare International Airport in Elk Grove Village. The remaining properties are located in the nearby suburbs of Buffalo Grove, Elgin and Vernon Hills – all of which offer exceptional access to interstate highways. The portfolio was 95% leased to more than 280 tenants at the time of closing.
Perkowski and Wurtzebach secured a non-recourse loan with no prepayment penalty through a national bank. The loan terms provide the new owners the ability to enhance the collateral value through light renovations.
$43.5 Million Bridge Loan for Adaptive Reuse Property in Downtown South Bend, Ind.
Perkowski sourced a $43.5 million bridge loan for IQI, the corporate umbrella for several technology, construction and real estate companies located in South Bend, Ind. The collateral includes a 98,450-square-foot colocation data center and 286,000 square feet of former industrial space at 635 S. Lafayette Blvd. that is being redeveloped as office space for technology-focused companies. The industrial space is part of the 1 million-square-foot former Studebaker auto manufacturing plant, which was shuttered in 1963.
The bridge loan will be used to retire debt, fund immediate capital expenditures and facilitate the lease-up of the newly refurbished Studebaker buildings. According to Perkowski, the loan presented challenges because the collateral is a specialty asset located in a tertiary market.