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Category ArchiveCharlie Rose

Editor’s Note: California, Here We Come!

Reading through our California correspondent Alison Stateman’s birds-eye view of the Los Angeles real estate market, I had one of those apple-falling-on-the-head epiphanies.

“Last year alone saw streaming giant Netflix fully lease 415,226 square feet of office space between the ICON and CUE buildings on the Sunset Bronson Lot at 5800 Sunset Boulevard at an estimated rent of $4.75 to $5 a square foot per month.”

Wait a second…the rent on Sunset Boulevard is $4.75 to $5 per square foot?

Taking a look at Cushman & Wakefield’s fourth-quarter 2017 Greater Los Angeles office report the figure was even more shocking: $3.29 was the average asking rent, up from $3.01 the previous year.

What the heck—I wondered—is Commercial Observer doing taking office space in Downtown Manhattan, where the rent averages $60.23 per square foot, as per C&W’s fourth-quarter Manhattan office report?

As worldly as we pretend to be, New Yorkers are still extremely provincial when it comes to knowing the way things function outside of our five-borough plot of heaven. And, if anything, being caught off guard by the fact that rents were so low in the second most-populous metropolis in the nation reinforced precisely why CO is launching a Los Angeles newsletter and including regular L.A. coverage on the website.

First off, New York real estate professionals should know this kind of stuff. We’ve long said that real estate is a national story as much as a local one—and the serious real estate professionals should be versed in the growing, thriving markets no matter where they’re based.

But second, and more important, it’s critical that a market like L.A., which saw 12 million square feet of leases signed last year, has an outlet dedicated to real estate news. For months we talked to brokers, publicists, architects and retailers—all of whom told us the same thing: L.A. needs a publication like CO.

Our model is simple: We are doing the same sorts of features that CO has covered so well in Gotham for more than a decade. This includes sitting down with some of the giants of the industry like Frank Gehry, probably the greatest architect of his generation; news of transactions like Intercontinental’s $123.5 million buy in Burbank; how these transactions are financed, like Runyon Group’s $38 million construction loan for a mixed-use development in Culiver City; the state and local news that affects development; data analysis like the fact that L.A. is the second-largest coworking market in the country; Q&As with California’s finance professionals like Invesco’s Charlie Rose (not the same as the talk show guy). And more.

As we delve further into L.A. coverage, our mantra from New York will be, “Hooray for Hollywood!”

Source: commercial

Invesco’s Charlie Rose Talks Revamped Debt Platform and What’s in Store for 2018

While Invesco Real Estate has been an under-the-radar mezzanine lender for many years, last year the firm made a decision to ramp up its debt platform with a plan to originate senior loans—entering a highly competitive market that’s already brimming with capital.

Charlie Rose joined Invesco’s structured investment group last year from Los Angeles-based Canyon Partners, as part of the financier’s push.

With a goal to reach $1.6 billion in origination volume this year, Invesco has its work cut out for it. “First and foremost, we’ll leverage the firms broader relationships as an equity investor in the marketplace,” Rose told Commercial Observer. “We have a lean team, so we’re generally focusing on larger loans in negotiation situations with relationship borrowers. Right now, we’re on track to hit $1.6 billion.”

Rose caught up with CO at the MBA Multifamily Convention and Expo in San Diego last week to discuss his team’s lending strategy, how they’re prepared to compete and potential headwinds they could face this year.

Commercial Observer: Any new deals in the works?

Charlie Rose: Yeah! We are closing a senior loan on a newly built apartment project in Miami, and we’ve executed term sheets on several other opportunities, including a couple multifamily opportunities: One is a value-add opportunity, and the other is a newly constructed multifamily deal as well as a hotel acquisition loan here on the West Coast.

Which areas on the West Coast have been appealing so far?

In California, primarily the coastal markets—so the Bay Area and coastal Southern California from Los Angeles down to San Diego. And nationally, the top 20 markets and across all property types.

Are there any specific asset classes where you like to direct your focus?

I would say the majority of our pipeline today is high-quality multifamily properties. That being said, we lend across all major asset classes. So, you’ll see us particularly active in 2018, lending on multifamily, office, hospitality—with a lesser focus on specialty classes, as well as industrial and retail.

With a market that’s already heavily competitive and flooded with capital, what’s your strategy for standing out in a crowded field?

Several things. We take a credit-over-yield approach to lending, so credit and underwriting come first and—generally speaking—our pricing is highly competitive for those deals that meet our credit standards. Secondly, we are an integrated real estate investment management platform that includes a significant equity investment platform, which owns 90 million square feet of real estate nationally. So, our access to information through our existing portfolio and our internal resources and relationships allows us to be much quicker in our turnaround times and responses then many lenders that may not have that breadth of information internally. Lastly, we’re very flexible on structure and term. We’re willing to have minimal prepayment penalties, but we can also go out as long as a seven-year term on a nonrecourse, floating-rate basis, which distinguishes us from some of the other lenders in the same space.

Who are you competing with mostly?

We compete against both banks and debt funds. Occasionally, borrowers will be evaluating multiple options, which may include our capital, banks and life insurance money. So, I would not say that there’s a single, direct competitor whom we butt up against regularly, but we often see our borrowers evaluating our loans alongside some of the larger debt funds and mortgage real estate investment trusts but also domestic and European banks and then, occasionally, life insurance companies.

It’s a tough landscape right now for construction financing. What is your team’s position on it?

Our debt strategy is to invest in construction situations on a very limited basis. So, don’t think of us as a construction lender. We did recently close a senior construction loan on a ground-up industrial deal on the Inland Empire in California. And, we like the industrial construction lending space because the construction risk is mitigated, the construction time frame is much shorter than other assets classes, and it’s a great way for us to access high-quality, newly constructed and state-of-the-art industrial product.

What are some challenges or hurdles your team is anticipating going forward?

Without a question, spreads have compressed significantly over the last two years—even over the last six months. It’s incumbent upon us to maintain every day our discipline on our credit standards and not be tempted to loosen our standards in order to get that higher spread. We spend a lot of time thinking about selecting our spot in the market and being judicious with our use of time on deals that will be heavily bid on.

Source: commercial

Invesco Closes on $113M in Financings to Kick Off 2018

Invesco Real Estate has participated in roughly $252 million in financings, closing on $113.3 million to kick off the year, including the in-house origination and closing of five mezzanine and senior loans on multiple properties across the country, the firm announced last week.

“We built out our debt team in 2017… we’re seeking to deploy approximately $1.6 billion in debt capital in 2018,” Invesco Senior Director Charlie Rose told Commercial Observer. “From our debt strategy, we’re focused on non recourse, floating rate bridge loans in major markets across the country on institutional quality real estate. We’re looking to fill the gap between opportunistic debt funds and non recourse bank lenders, going up to 75 percent loan-to-cost (LTC).”

The firms originations and closings include two mezzanine loans, totaling $38.1 million, on one multifamily asset and one office property, and three senior loans, totaling $75.2 million, backed by an industrial asset and two multifamily properties.

The first senior loan was provided to a division of Newport Beach, Calif.-based Real Estate Development Associates for the ground-up construction of the Perris Gateway Commerce Centre, a roughly 400,000-square-foot Class A distribution facility in Perris, Calif.; the second senior loan was $25.2 million provided to a Veritas Capital and Avenue Secured joint venture to finance the acquisition and renovation of Blanco Crossing, a 324-unit multifamily property located at 13999 Old Blanco Road in San Antonio, Texas; the final senior loan was $20.5 million provided to a joint venture between The Carlyle Group and CAF Capital Partners for the acquisition and lease-up of the Haven at Westheimer, a newly constructed 230-unit multifamily project located at 13250 Westheimer Road in Houston, Texas.

The first mezzanine piece Invesco originated was $23.5 million provided to an affiliate of Washington, D.C.-based Roadside Development and backed by a 142-unit multifamily property within D.C.’s City Market at O at 880 P Street—the total financing package was $66 million. The mezzanine loan worked to facilitate a recapitalization and lease up of the building.

The second mezzanine loan was $14.6 million secured by Denver, Colo.-based Dividend Capital as part of a $111 million refinancing of 655 Montgomery, a 263,000-square-foot, Class A office building at 655 Montgomery Street in San Francisco, Calif.

“We have a mature equity investing businesses,” Rose said. “The debt business is the perfect compliment. It allows us to offer more products to our existing relationships and gain access to an income producing, downside-protected product in the real estate investing sector.”

Source: commercial