As Proven by the Boeing Regional Office Complex
Metropolitan Capital Advisors (“MCA”) recently closed a very complex transaction: a $63.0mm refinancing of the Boeing Regional Office Complex—a three-building office campus totaling 529,822 SF in Oklahoma City that is 100% leased by The Boeing Company.
Although a single-tenant deal sounds straight-forward, the size of the transaction made the complexity of this transaction just the opposite. Reflecting on the events that took place and the decisions that were made to consummate this deal, the Boeing transaction supports the notion that using an experienced finance intermediary (such as Metropolitan Capital Advisors) will add significant value to your capital requirement pursuits,regardless of the size of the transaction.
Below is MCA’s Top 5 list on how our firm delivered superior results on the Boeing transaction:
1. Confidence: Boeing occupied 100% of a three-building office complex in OKC. Each building had a different lease term—none more than seven years. The short durations of the leases made this a very difficult assignment! Not only did we have to convince a non-recourse lender that Boeing was not going anywhere, but we had to convince the lender to allow for a large equity cash-out to the Borrower based on value creation. With the facts that we had in hand, we had to be extremely confident in the value and stability of the leases as well as Boeing’s long-term commitment to the facility.
2. Capital Sourcing: Since this was very large loan (a “Top 10 Loan” in any securitization pool), the Boeing deal was heavily scrutinized by every lender. The equity-cash out caused a lot of heartburn for most lenders, resulting in debt quotes with much lower proceeds than we had requested. MCA found an international lender that understood the real value of the asset and provided the leverage our client was seeking. After presenting to 30+ lenders, there was one lender that differentiated itself from the rest of the pack.
3. Loan Structure: This mortgage had more structure than the actual building’s foundation! The Boeing Office Complex was made up of three buildings, all with staggered lease terms (with the longest being seven years). We were able to come up with a TI/LC reserve and amortization structure that made the lender comfortable that the partnership would be sufficiently capitalized in the event Boeing were to ever move out. These TI/LC reserves will be released back to the Borrower upon each lease extension.
4. Speed Bumps and Detours: As mentioned above, due to this loan being a “Top 10 Loan” in a securitization pool, every aspect and detail of this transaction was heavily scrutinized. During the review of the leases, we found out that Boeing had a purchase option in one of the three leases. This is an absolute NON-STARTER for any securitized lender because the eventual bond holders are expecting their loan to produce a certain yield on the entire principal balance for the whole term (in this case ten years). MCA and the Borrower were successful in getting Boeing to waive their purchase option in that particular lease by offering them a minor tenant improvement (TI) allowance. Problem solved!
5. Client Appreciation: This transaction was completed for a relatively new client of MCA. This refinance was a game changer for this Sponsor. Not only did he get off a major recourse liability, but he returned a very large slug of equity to his personal balance sheet. He was so impressed with our diligence and creativity that he has turned over all of his deals to us to be his exclusive financial advisor.
The value of using an experienced commercial real estate finance intermediary (i.e. MCA) was a reoccurring theme throughout this transaction. MCA is not only fearless in the wake of difficult deals, but we embrace them with open arms. Clients see the true value of having our firm on their team, especially when times get tough. Once the value perception is acknowledged, Clients keep us in the loop on all of their real estate capital requirements. If you have a commercial real estate deal you have questions about or needs financing, please fill out the form below: