$140,000,000 Debt/Mezzanine Portfolio Acquisition Financing

BlueStone secured capital for the recapitalization of two class-A office buildings in central Florida. The owner’s original goal was to secure a new equity investor to buy out their existing partners in the property. BlueStone determined a more advantageous approach: we restructured the deal and showed that the building was worth 20% more than the closest comparables in central and eastern Florida markets. We then leveraged the newly established value to support sufficient debt capital to buy out the existing partners, while allowing the owners to control 100% of the building and saving $1MM in interest expense per year. BlueStone secured $170,500,000 comprised of $137,000,000 in a senior fixed rate mortgage at 5.75% for a 10-year term, 2-year I/O, and 30-year amortization thereafter, plus $32,500,000 mezzanine financing at 11%, bringing the total leverage to 90% loan-to-value (LTV).

BlueStone secured $140,000,000 of senior and mezzanine acquisition financing on behalf of a joint venture between CNL Financial Group and American Retirement Corporation (ARC).  The high leverage, non-recourse floating rate senior debt and mezzanine financing were priced above LIBOR and provided by a portfolio lender.  The financing enabled CNL/ARC to complete the acquisition of four existing Town Village independent living communities, properties that have not been operating to their fullest potential by the developer and seller of the portfolio.  BlueStone quickly understood the borrower's complex financing needs and was able to articulate this to highly qualified lenders and investors.  Within 24 hours, BlueStone secured a term sheet from a portfolio lender that ultimately closed under and extremely tight timeframe with the exact quoted terms. 

One of Philadelphia's top developers, Tower Investments, engaged BlueStone to secure financing to construct a student housing, retail and movie theater complex located at Temple University's Philadelphia campus. It is the largest privately financed development in North Philadelphia's history. Although competing with the developer's existing bank, BlueStone won the deal based on its ability to deliver superior financing. The $60,800,000 construction financing was underwritten with a 2-year term on an interest only basis. Loan proceeds were set at 80% of the project's stabilized value without loan-to-cost constraint, an extremely rare benefit extended to the developer through BlueStone’s financing package. The construction financing also contained a provision that allows for the loan to become fully non-recourse when a forward commitment for funds at construction completion is secured.

BlueStone Hospitality & Leisure acted as the investment banker in bringing together Philadelphia-based AMC Delancey and Chicago-based Harp-MidAm Development to acquire the Holiday Inn Select in Naperville, IL, by raising $62,600,000 in equity and debt financing. BlueStone quickly understood the capital needs and time constraints of Harp-MidAm Development and was able to articulate these needs to equity and debt partners capable of committing the required capital and completing the due diligence in less than 45 days. The financing included high leverage, limited recourse, floating rate acquisition and debt that converts to a fixed rate upon stabilization of the property, as well as $14MM in joint venture equity. The Harp-MidAm Group commented that BlueStone’s leadership enabled a very smooth process and a timely transaction closing.

One of the nation’s top-performing hotel real estate investment trusts (REITs) engaged BlueStone to optimize its capital structure and financing after becoming a publicly traded company. The REIT structure organized a portfolio of privately owned hotels that had local bank floating rate mortgages personally guaranteed by the Chairman and other executives. The REIT also wanted to tap their properties' appreciated value to recapture equity for further growth and acquisitions. The challenge was combining this disparate portfolio of properties to meet the borrower's goal of having one loan secured by a majority of its portfolio. All other investment banks engaged by the borrower prior to BlueStone could not accomplish this objective. BlueStone recognized that the only way to satisfy the borrower's requirements was to identify a lender willing to hold the loan on its balance sheet. With its deep hospitality knowledge, BlueStone was able to successfully demonstrate to the lender the quality of the portfolio and the experience of the borrower, thus paving the way to a highly competitive, non-recourse, cross-collateralized portfolio loan.

A top Philadelphia based developer engaged BlueStone to secure financing to acquire a full city block in the heart of Center City, Philadelphia.  The site consists of parking, retail, and office.  At acquisition, the property was 95% leased, of which 60% was represented by city and government agencies.  Due to the mismanagement of the property over the previous years, BlueStone was tasked with convincing investors that our client would be able to raise the net operating income by 33%, a difficult feat considering the property was considered stabilized for so many years.  The $110,000,000 financing was underwritten with a one year term on an interest only basis.  Loan proceeds were set at 80% of the project's stabilized value subject to net operating income growth and improvements to the property. 

One of the largest Cendant franchised hotel owners engaged BlueStone to secure financing for its portfolio of 2,200 hotel rooms in Orlando, FL. However, the challenges appeared insurmountable: 1) The aging properties had lost their competitive edge and slipped into bankruptcy; 2) the properties had approximately $100MM in first mortgage debt and were worth about $70MM; 3) there were significant environmental problems. The court gave BlueStone 30 days to submit a resolution plan and a commitment for funding. When the borrower engaged BlueStone, he was planning to give the properties back to the lender because no other investment bank had been able to offer a solution.
 
BlueStone recognized that this portfolio was not an asset that the lender wanted. Based on our relationship with the existing lender, BlueStone negotiated a discounted pay-off on the senior financing. This event triggered a taxable liability to the borrower that required additional capital to fund this expense. Also, the environmental problem required significant capital to correct. To solve the environmental problem and the need for additional capital to invest into the properties, BlueStone had to secure mezzanine financing for a very speculative business plan. BlueStone was able to secure market rate non-recourse senior financing and participated in the mezzanine capital tier to provide a $58,000,000 package of financing that allowed the borrower to retain 100% ownership in the properties and emerge from bankruptcy. The transaction closed in 45 days.