Realty Finance Trust has provided a $33.65 million loan to Biynah Industrial Partners and Alex. Brown Realty for the acquisition of a three-property industrial portfolio totaling 1.7 million sq ft in Minnesota and Wisconsin.
The three-year, floating-rate loan with three one-year extension carries a 65 percent loan-to-value, based on the approximately $50 million the sponsors paid for the three buildings, Real Estate Capital has learned.
The joint venture partners have been working together, investing in industrial assets throughout the Midwest, since 2006.
“We bought at a very attractive basis and yield,” said Tom Burton, CIO at Alex. Brown Realty. The firms plan to “enjoy the current cash flow” of the 100-percent-leased buildings, with the intention of ultimately renewing and converting leases from short- to long-term and bringing the properties back to market in three to five years.
One of the modern warehouse facilities is in Lino Lakes, Minnesota at 435 Park Court, and the other two at 5929 Packer Drive in Menomonie and 1731 Industrial Parkway in Marinette, Wisconsin.
“With a basis more than 25 percent below replacement cost and an unlevered yield in excess of 8.5 percent, this portfolio represents value-investing at its finest,” said HFF managing director Matthew Schoenfeldt, who led a team that arranged the financing. “Realty Finance Trust immediately embraced the borrowers’ strategy and delivered a fantastic execution, from application to close.”
Other joint venture acquisitions between Jeff Joseph’s Biynah Industrial Partners and Alex. Brown Realty include the May 2014 purchase of the Great Lakes Industrial Portfolio in Cleveland, Ohio; and in October 2013 the acquisition of the Milwaukee Industrial Portfolio in Milwaukee, Wisconsin. Both of those included equity contributions from ABR Chesapeake Fund IV, a value-added real estate fund sponsored by ABR.
Realty Finance Trust is a public, non-traded REIT which originates and manages a portfolio of commercial real estate debt investments secured by income-producing properties. Investments include first mortgages, mezzanine loans, B-Notes, preferred equity and real estate debt securities.