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Category ArchiveInvesco Real Estate

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

Square Mile Lends $133M on Former LA Times Printing Facility

Square Mile Capital Management has provided a $133 million loan secured for the acquisition and redevelopment of The Pressa 420,000-square foot creative office property redevelopment in Costa Mesa, Calif., Commercial Observer can first report.  

Invesco Real Estate and SteelWave recently acquired the propertyformerly a Los Angeles Times printing facilityfrom Tribune Media and Kearny Real Estate in an off-market deal. Square Mile’s loan financed the joint venture’s acquisition and will also fund construction costs and leasing costs to redevelop and stabilize the property, which is directly adjacent to SteelWave’s Hive project—a 180,000 square foot creative campus that is home to the Los Angeles Chargers‘ headquarters and training facility.

“We were especially drawn to this transaction by the opportunity to back two market-leading investors, developers, and operators who each bring recent, directly applicable experience to the table,” said Michael Mestel, a principal at Square Mile. “Between Invesco Real Estate’s highly successful redevelopment of Apollo at Rosecrans in El Segundo and SteelWave’s current project next door at Hive, this is the ideal team to unlock the site’s potential and deliver market-leading product.”

HFF’s John Rose, Todd Sugimoto, Patrick Burger and Olga Walsh negotiated the financing on behalf of the borrower.  

The site includes a 250,000-square-foot industrial building, a 112,000-square-foot office building, as well as an adjacent 4-acre site.  The immediate plan is to redevelop approximately 420,000 square feet of creative office space and retail—including a food hall, but the site allows for an additional 230,000 square feet in future development.

“We saw an immense potential in The Press and our vision is to redevelop the asset to be the single most significant creative office opportunity in Orange County, if not all of Southern California,” said Seth Hiromura, the managing director of acquisitions and development at SteelWave, in an announcement regarding the acquisition.

The redevelopment marks SteelWave’s first joint venture with Invesco and will be complete within two years.

“By combining the existing structure’s heavy industrial feel with Class-A creative office amenities and finishes, SteelWave and Invesco Real Estate are positioned to create a unique product that has thrived in markets like West Los Angeles and San Diego but doesn’t currently exist in Orange County,” Daniel Neumann, a vice president at Square Mile, said. “With an abundance of retail and recreational amenities on-site, The Press will create a true campus environment that we believe will be well received by prospective tenants.”

Jonathan Hastanan, a vice president of acquisitions and development at SteelWave, said the project also “pays tribute to the history of the building by embracing its character, making it unique to the region.”

Source: commercial

Jewelry Designer Inks a Deal at The Factory in LIC

A jewelry maker will join a growing roster of fashion and design tenants at The Factory, a sprawling former warehouse in Long Island City, Queens, Commercial Observer can first report.

Starlight Designs has leased 17,000 square feet for eight years on the fifth floor of the 1.1-million-square-foot building at 30-30 47th Avenue, between 30th Place and 31st Street, according to information from Kalmon Dolgin Affiliates, which represented the tenant.

The new company will design and distribute its wares from the 10-story building. Asking rents weren’t immediately available, but CO has previously reported that asking rents range from the high-$30s to mid-$40s per square foot.

KDA’s Jeffrey Unger represented the tenant, and Jordan Gosin of Newmark Grubb Knight Frank represented The Factory’s landlord in the deal. Atlas Capital Group, Square Mile Capital Management and Invesco Real Estate purchased the block-long industrial property in 2014.

Starlight is only the latest fashion firm to move into the 1920s structure, which was originally constructed as a warehouse for Macy’s. Macy’s, Polo Ralph Lauren, and Madewell have all inked deals in the complex, and so has Gwynnie Bee, a women’s apparel company that allows customers to rent clothes online.

“Three or four years ago, fashion companies wouldn’t look out here,” Unger told CO. “Now it’s established itself more for these kinds of tenancies now. Between all the buildings that have been repositioned, like Falchi and Factory and the Hub and Commerce LIC, plus the substantial residential and retail conversions that are taking place, the’r’e really transforming Long Island City tremendously.”

A handful of food companies have also moved into the The Factory. Two Boots Pizzeria, Vanessa’s Dumplings and Papillon Bistro have relocated their production facilities there, Queens Courier reported in January.

The property has undergone a major renovation in the past two years, as the neighboring Falchi Building has filled with trendy tenants like Uber and Doughnut Plant.

Source: commercial