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Category ArchiveLotus Capital Partners

Lotus Capital Arranges $237M in Financing for London Luxury Condo Project

A little over a year after its launch, Lotus Capital Partners has gone global and negotiated a $237 million (£170 million) financing for Belgravia Gate—a 12-apartment, 83,054-square-foot luxury condominium property in Central London—Commercial Observer has learned.

An affiliate of Apollo Global Management provided the condo inventory loan to Wainbridge, a private real estate investor, developer and asset manager of landmark properties in Europe and North America whose New York properties include 196 Orchard Street and 551 West 21st Street.

Apollo’s loan will be used to pay off existing construction debt—provided by a group of European lenders led by LetterOneand carry the project through the units’ sell-out period.

The transaction wrapped last Wednesday and the closing marks Lotus’ first deal in Europe.

“In arranging capital for this condo inventory deal, Lotus demonstrated its capacity to solve meaningful challenges for sponsors seeking development financing,” Faisal Ashraf, Lotus’ founder and chief executive officer, said in prepared remarks.

Originally built in 1867, the property is located at 11-15 Grosvenor Crescent in Belgravia, one of London’s  prestigious “Golden Postcodes”. Thomas Juul Hansen designed the building’s 12 luxury apartments, which include three townhouse-style apartments and two penthouse apartments.

Belgravia Gate is among the most expensive condominium properties in the world when measured by average apartment unit value, according to information provided by Lotus.

Apollo’s loan is collateralized by nine of those units (three of Belgravia Gate’s apartments were sold prior to the financing), giving each remaining unit an average listing price of £19 million ($26.5 million). One unit was pre-sold in Oct. 2015 for a whopping £32.5 million ($45 million).

Property amenities include direct, private lifts to each property, a spa, a fitness center, a 57-foot swimming pool and private meeting room facilities.

Wainbridge acquired the property in December 2013 from the Grosvenor Estate—a family-owned real estate investment firm with holdings throughout London—for £120.4 million ($167 million).

Westminster City Council approved Wainbridge’s plans to redevelop the existing office building into a super-prime residential property the same year. Construction began in June 2014 and is now in its final stages.

Lotus had to tackle economic uncertainty stemming from Brexit and the U.K. general election (in June 2017) while putting the transaction together. But, the firm utilized its knack for arranging and structuring capital in ways that reflect clients’ complex needs while navigating secular challenges that are unique to each individual project.

“The successful closing of this deal underscores our real estate financing expertise and market credibility among capital sources, both of which are required to arrange and execute on complex deals such as this,” Ashraf said.

New York-based Lotus has also been keeping busy on this side of the pond. Last October, the firm arranged $395 million in financing for the construction and recapitalization of Penn-Florida CompaniesVia Mizner—a 2-million-square-foot mixed-use project in Boca Raton, Fla. Mack Real Estate Credit Strategies provided a $315 million loan and the United States Immigration Fund provided an additional $80 million.

Since its launch, the firm has secured $1.5 billion in financing and it expects that amount to increase this year, Ashraf said.

Officials at Wainbridge and Apollo did not immediately return a request for comment.

Source: commercial

CREFC 2018: Faisal Ashraf Weighs in on Lotus Capital’s New Platform

Lotus Capital Partners has been off to the races since it launched in 2016. In addition to arranging $315 million in financing from Mack Real Estate Credit Strategies for the construction and recapitalization of Penn-Florida Companies Via Mizner—a 2-million-square-foot mixed use project in Boca Raton, Fla., last year, the firm just expanded its offerings in launching a loan sale and distribution platform.

The business will serve lenders and investors looking to de-risk and leverage their positions in whole loans, A-notes and mezzanine debt. Lotus has already closed $150 million in private placements, including three ten-year mezzanine tranches on pharmaceutical company Allergan’s new headquarters in Madison, N.J., structuring and separately placed $70 million with Hyundai Asset ManagementMorrison Street Capital and Blackrock. The initiative will be led by Tim Taylor, the former head of special situations at Ten-X.

Commercial Observer caught up with Faisal Ashraf, Lotus Capital’s founder and managing partner, at the CREFC conference in Miami to learn more about the launch.

How has the conference been for you?

I’ve never seen so many happy people in my life. I found bullish sentiments all around. The only bit of frustration I found, which is a little ironic, is that people can’t get their money out fast enough.

Lotus Capital just launched a loan sale and distribution business. Talk us through why it’s the right time to launch a platform such as this. 

There’s a myth that loan sale advisory is a only a countercyclical business that is needed in a downturn. We believe that there’s abundant opportunity to address the capital needs of investors generally in the whole loan format or within their current capital structures. Additionally, we characterize ourselves as the only outsourced capital markets desk in the business, which means that existing lenders can outsource, for example, the A-note distribution of their portfolios to us so that they can leverage yield. As you know, a big part of debt funds’ strategies is to sell off their A-notes.

So, this is a business that has little to do with a downturn but rather the existing need that investors have today and it just so happens that there’s nobody else providing it.  As an example of capital structure distribution and just to test the thesis, I sold $150 million in mezz on behalf of a CMBS dealer recently.  This is a very technical process, it involves negotiating inter-creditor agreements and we have to leave a certain amount of spread so that someone can still have a solid CMBS execution.

What’s the primary benefit in outsourcing the distribution?

While the biggest firms will likely continue to do things internally, not every firm has large or dedicated capital markets capability. I think that, generally speaking, a firm may use our services because they believe we carry different/deeper relationships in the capital markets, or because we have creative methods of structuring that will save them time and money.  For example, we may have 5 new ideas on how to get that paper sold in the Middle East or Far East. In that regard we become an outsourced capital markets private-placement desk.

The proof point in the Allergan deal [Lotus arranged a $115 million 10-year, fixed-rate CMBS financing from a CMBS dealer for Lincoln Equities Group for the new Allergan U.S. headquarters in Madison, N.J.] was that we sourced $70 million of mezzanine of which $50 million was from an investor who had never invested in the U.S. We have a series of relationships that are off-market and allow us to present some interesting solutions. We’re not the silver bullet by any means, but we can give you capital markets expertise, strong distribution and potentially attract the off-market bids from years spent running distribution desks on Wall Street. The upside to this is it allows lenders to focus on their day jobs instead of spending time doing what we do.

Where do you see Lotus Capital going from here?

My goal is for Lotus to be seen as a preeminent real estate investment banking firm—that doesn’t mean that we’ll be the biggest firm in the world, it means that people think about our firm as offering high-touch solutions with regarding to intermediating capital and over time we’ll add other dimensions to the business. For now I’m pleased we are the fasting growing firm of our kind in the country –zero to $1billion in our first full year.  The deals we’ve done and pace we have kept aren’t for the faint of heart.  

What do you expect to see in the industry in 2018?

I see more bullishness. Like every year I expect some hiccups, but the market did a good job of shaking those hiccups off in 2017. With regard to sector-specific expectations, I do believe this will be the year that the retail sector is dealt with a little more thoroughly. I think certain investors will say, “Ok, we understand now what the have and have-nots are, and we will scale down part of our retail portfolio.” And that’s a great opportunity for Lotus to help them address that need and distribute some of that paper. 

Source: commercial

Mack Real Estate Lends $315M on Florida Mixed-Use Resort

Mack Real Estate Credit Strategies has provided $315 million in financing for the construction and recapitalization of Via Mizner, a 2-million-square-foot mixed use project in Boca Raton, Fla., Commercial Observer can first report.

New York-based Lotus Capital Partners arranged the financing package on behalf of Boca Raton-based developer Penn-Florida Companies. The United States Immigration Fund (USIF) provided an additional $80 million to bring the total financing package to $395 million.

“Mack [Real Estate] is committed to its strategy of providing financing for best in class sponsors and projects,” Mack Real Estate Managing partner and Chief Investment Officer Peter Sotoloff said in prepared remarks. “After meeting the developer and analyzing Via Mizner, it was clear that the project was an excellent fit for us.”

The complex, located at 101-105 East Camino Real in Boca Raton, is comprised of five sections: the Residences at Mandarin Oriental, an 85-unit luxury condominium building; the Mandarin Oriental Hotel & Resort, a 164-key luxury hotel that will feature two rooftop pools, holistic spa services, an athletic club and dining venues; 101 Via Mizner, a 366-unit luxury apartment building; the Shoppes at Via Mizner, which will include 60,000 square feet of retail space; Via Mizner Golf & City Club that includes a brand new golf course designed by legendary golfer Jack Nicklaus, as well as tennis courts, a fitness center, a resort-style pool, a children’s playground and dining services.

“Boca Raton is an internationally-recognized community, and now the Downtown area has emerged as an exciting place to live. The addition of the Mandarin Oriental Hotel and Residences has elevated the City’s reputation as a global destination,” Penn-Florida Companies Chairman and Chief Executive Officer Mark Gensheimer said in prepared remarks. “Via Mizner is an urban resort where you can live, shop, stay and play and will offer unrivaled luxury, standards of service and amenities to its residents, guests and members.”

The debt refinances a development loan on the partially-occupied 101 Via Mizner apartment building and provides a new, ground-up construction loan for the Mandarin Oriental Hotel & Resort plus a bridge loan for the adjacent land that the Residences at Mandarin Oriental will occupy. The site’s completion is scheduled for the beginning of 2020.

“[Arranging the financing for this project] was a herculean achievement,” Lotus’ founding partner and Chief Executive Officer, Faisal Ashraf told CO. “It was designed to accommodate three parts of the 2 million-square-foot ecosystem… all of which are in different stages of development. [The goal was] to provide flexibility, and the financing was not only large but structured to account for the many features of the project.” Ashraf added that his firm competed with a roster of “hall-of-fame” brokerage firms to advise and structure the financing for Penn-Florida.

“In Mack [Real Estate], we identified a lending partner that was able to work with us in designing a financing structure that accommodated Penn-Florida’s scale and unique vision for this project,” Faisal said in prepared remarks.

Monthly rents at the already developed apartment building, 101 Via Mizner, range from $1,639 for a studio to over $4,400 for three-bedroom units.

Source: commercial