Arriba Capital hires originator Kyle Veenstra to run Wisconsin office

November 10th, 2017

 

Arriba Capital is pleased to announce that Kyle Veenstra has joined our Originations team as a Director. Based in Wausau, Wisconsin, Veenstra will focus on originating bridge and permanent financing for hotel, industrial, office, retail, and multifamily properties throughout the US with a focus on the Midwest, as well as expanding the firm's SBA financing services.

“We would like to welcome Kyle Veenstra to the Arriba Capital team. He is an experienced veteran of the commercial real estate world and well respected in the community. He will be spearheading our efforts in the Midwest and utilizing his extensive network to originate and underwrite bridge and permanent debt deals for clients throughout the Midwest and nationwide.”  - Said Nick Barbaria President of Arriba Capital

Before joining Arriba, Veenstra led Independence Capital, overseeing debt and equity placement for clients throughout the Midwest. In addition to founding Independence Capital, Veenstra is a principal of the boutique appraisal firm Appraisal Service, LLC in Wausau, WI.

“I’m excited at the opportunity to join the team at Arriba Capital. I’ll be able to utilize the expertise and tools at Arriba Capital in an effort to better serve existing and future clients. I look forward to helping Arriba Capital grow throughout the Midwest and nationwide."

Veenstra holds a bachelor's degree in Political Science & Public Administration from the University of Wisconsin - Green Bay. A former professional racquetball player, Veenstra enjoys time with family, sports, coaching his kids athletic teams, and volunteering at his children's school. Veenstra will be establishing our new branch office in Wausau, Wisconsin, and can be reached at kyle@arribacapital.com or by phone at (715) 212-1976.

Arriba Capital Closes a $3,360,000 Refinance: Katy, TX

Arriba Capital successfully closed a $3,360,000 loan on a 10,000 S/F retail center in Katy, TX. The property was 89% pre-leased at closing, with tenants in procession of their space and in the process of completing their respective tenant-improvements. The loan was leveraged to 70% of value and priced at 4.27%.

The borrower is an experienced, privately held, restaurant group that currently owns and operates restaurants in Texas, Wisconsin, & Indiana.

Arriba Capital Closes a $5,460,000 Cash-Out Refinance: Fresno, CA

Arriba Capital successfully closed a $5,460,000 cash-out refinance for a 160,000+ S/F industrial building just outside of Fresno, CA.

The proceeds were used to refinance the existing private money debt while providing the sponsorship enough cash-out to complete two additional real estate acquisitions. The 15-year loan, 30-year amortization, was sized to 70% LTV and priced at 4.75%. From start to finish the loan was closed in just under 60-days.

Arriba Capital Closes a $1,250,000 Refinance & Working Capital Loan: Tucson, AZ

Arriba Capital successfully closed a $1,250,000 loan for a gymnastics & dance studio located in Tucson, AZ.

The new loan consolidated the existing business & real estate debt under one credit facility, while significantly reducing the overall interest cost & extending the amortization period. By restructuring the debt, Arriba was able to reduce our client's monthly debt payment obligation by 35%.

Arriba Capital Closes a $14,900,000 Acquisition Loan: Florida

Arriba Capital successfully closed a $14,900,000 loan for two Hampton Inn's on Florida's Atlantic Coast. Each property will go through substantial PIP's. As a result, Hilton will be extending the franchise terms at each property for another 15 years. The two year loan was sized up to 70% of the total project cost. The loan was closed in 45 days from application to meet a 1031 deadline.

The borrower is an experienced, privately held, hospitality group located in the southeast.

Arriba Capital Closes a $6,050,000 Cash-Out Refinance Loan: Biloxi, MS

Arriba Capital successfully closed a $6,050,000 fixed rate permanent loan for a Quality Inn limited service hotel in Biloxi, MS. The property was severely damaged in 2006 due to Hurricane Katrina and rebuilt in 2007. The borrower also suffered in 2011 from the BP Oil Spill in the Gulf of Mexico. Through perseverance and quality management, the borrower was able to stabilize operations after multiple catastrophes. Arriba's new loan allowed for the borrower to lock-in attractive long term financing and pull cash out. 

Arriba Capital Closes a $9,000,000 Construction Loan: Houston, TX

Arriba Capital successfully closed a total of nine-million dollars in construction financing for a twenty-six thousand square-foot retail property in Katy, TX. The loan was structured in two tranches, a five-million dollar first and a four-million dollar revolving credit facility secured in a second trust deed position. The 18-month construction loan was sized to 75% of total project cost. The retail space was 50% preleased at the time of closing.
 

The borrower is an experienced, privately held, restaurant group that currently owns and operates restaurants in Texas, Wisconsin, & Indiana.

Arriba Capital Closes a $3,000,000 Loan: Morrow, GA

Arriba Capital (Arriba) successfully closed a $3M permanent loan secured by 70,000 SF Class A office building in Morrow, GA.  The property was 65% leased at time of closing with mainly government tenants.  The new loan refinanced the initial hard money acquisition loan and provided cash back to the borrower.

The borrower is a Toronto-based real estate investor with extensive experience in owning and leasing Class-A office properties throughout North America.

Arriba Capital Closes a $5,000,000 Construction Loan: Houston, TX

Arriba Capital (Arriba) successfully closed a $5,000,000 construction loan for a 6,000 Square-foot restaurant in Houston, TX. The new credit facility was used to refinance the existing land loan, fund the necessary site development, construction of the shell building, and completion of the tenant-improvements. The 16-month construction loan was sized to 75% of cost and priced at Prime + 1.50%. The restaurant facility will be completed in late May with a June 1st opening date.

The borrower is an experienced, privately held, restaurant group that currently owns and operates restaurants in Texas, Wisconsin, & Indiana.

Arriba Capital Closes a $2,200,000 Bridge Loan: Los Angeles, CA

Arriba Capital (Arriba) successfully closed a $2.2M bridge loan secured by a property in Los Angeles, CA. The bridge loan was used to refinance the existing maturing debt and fund the necessary site improvements. The 12-month bridge loan was priced at 10% and sized to 65% of value. 

How rising interest rates will affect the commercial real estate market

Over the last month, short-term interest rates have risen to their highest levels since October of 2008.  Federal Funds futures nearly tripled over the last month with the expectations that the Fed will continue to raise interest rate at least twice throughout the year. According to “The Bond King”, Jeffrey Gundlach, CEO of Doubleline Capital. “I expect a rally on the 10-year and the 30-year, to below 2-1/4 at a minimum on the 10-year, maybe a little bit lower than 2 and then it moves back up.” What does this mean for commercial real estate? Although it’s typically not in perfect correlation, rising interest rates will affect cap rates for various types of commercial real estate properties. The low-interest rate environment over the last 8-9 years has forced cap rate levels to the lowest point in several decades.

How should real estate investors react? For investors that intend on holding assets in their portfolios for the foreseeable future, now would be a good time to consider locking in long-term financing. Although interest rates have ticked up from the bottom of the market, they’re still at historical lows. The Fed has already indicated 3 rate increases this year. As interest rates increase, so do cap rates. Rising cap rates will push values down thus making it harder to refinance a property at previous valuations.

Throughout history commercial real estate has proven to be a solid hedge against inflationary pressures. There are still opportunities available for both buyers and sellers in this space and the best advice is to understand the macro economic impact in a rising interest rate environment.

Arriba Capital Closes a $6,000,000 Cash-Out Refinance Loan: Cypress, TX

Arriba Capital (Arriba) successfully closed a $6,000,000 cash-out refinance on a 17,000 square-foot retail center located in Cypress, TX. The loan, structured to 80% loan-to-value, enabled the sponsorship to repay preferred equity investors and lock-in long-term fixed rate financing. The property, which was constructed in 2016, was 100% occupied at the time of closing. The loan was priced at 4.75%, fixed for 7-years, with a 3-year option, and amortized over 25-years. 

The borrower is an experienced, privately held, Houston-based development and management company. 

Arriba Capital Closes a $1,300,000 SBA Loan: Mesa, AZ

Arriba Capital (Arriba) successfully closed a $1,300,000 acquisition loan for an owner-operated paintball field located in Mesa, AZ.

Arriba Capital worked closely with the sponsor to place this projection based deal. The borrower had come to us with a lease for his existing business running out and a short time span to complete this acquisition. Due to the circumstances, a certainty of execution was critical. In addition to the aquistion financing, Arriba arranged a $150,000 line of credit for working capital to ease cash flow during the transition.

The borrower is a long time Phoenix-based operator of paintball facilities

Arriba Capital Closes a $500,000 SBA Loan: Indianapolis, IN

Arriba Capital (Arriba) successfully closed a $500,000 SBA 7a loan for established restaurant concept located in Indianapolis, IN. The new financing structure refinanced the existing private money debt and provided the sponsorship necessary working capital dollar to purchase inventory and pay off receivables. The loan, mostly unsecured, was priced at Prime + 2.00% with a 10-year term and a 10-year amortization.

ARRIBA CAPITAL CLOSES $17,700,000 BRIDGE LOAN IN SOUTHFIELD, MI

Arriba Capital has closed a $17,700,000 fixed rate bridge loan for the refinance of the Metro Office Complex, a 565,000 SF, 4-building office campus formerly occupied by Blue Cross Blue Shield of Michigan. The financing structure included an initial term of three years with possible extension options. The borrower intends on doing comprehensive capital improvements to lease-up the vacant space and then refinance the property with permanent debt.

The sponsor sought certainty of execution in order to refinance its current loan under an expedited closing timeline with a year-end maturity - The new loan was closed in 15 days from application.

The borrower is a Toronto-based real estate investor with extensive experience in owning and leasing Class-A office properties throughout North America.

ARRIBA CAPITAL CLOSES A $1,650,000 Loan for an Ice Arena in Des Moines, IA

Arriba Capital (Arriba) successfully closed a $1,650,000 acquisition loan for an owner-operated ice arena located in Des Moines, Iowa. The sponsorship entered in to a lease-option to purchase the property a number of years back, but was unable to find traditional capital sources to close the transaction. Arriba structured a creative financing solution that included a combination of a 1st mortgage and a seller-subordinated 2nd mortgage. The 25-year 1st mortgage was leveraged to 82.5% of cost & priced at Prime + 2.50%.

ARRIBA CAPITAL CLOSES A $15,000,000 BRIDGE LOAN IN NEW YORK

Arriba Capital (Arriba) successfully closed a $15,000,000 bridge loan for a 430-acre campus located in New York. With the purchase contract expiring in just a few days, the transaction required a small window of execution. Arriba was able to deliver a 6-month interest only loan, levered to 60% of cost, priced at 11%, and closed in just 6 business days.  

WHAT HVCRE MEANS FOR COMMERCIAL LENDING

The acronym HVCRE stands for “High Volatility Commercial Real Estate”. The new regulations affecting HVCRE were part of the Basel III banking laws passed into law between 2010 & 2011. These new regulatory capital rules officially came into effect in January of 2015, but most financial institutions were granted an extension until December of 2016, to adhere to these new guidelines. The new regulation requires banks as well as all savings and loans institutions, to set aside 50% more capital against certain construction and development loans that are deemed HVCRE. What types of properties / loans are considered HVCRE? What does this mean for our borrowers?

What qualifies as HVCRE?

All loans used for acquisition, development, and construction of real property prior to a conversion to permanent financing are considered HVCRE unless one of the following criteria is met:

  1. One-to-four-family residential properties;
  2. Community development loans;
  3. The purchase or development of certain agricultural land;
  4. And other commercial real estate projects in which the loan-to-value (LTV) ratio is less than a supervisory ratio established by bank regulators, and the borrower has contributed equity of at least 15 percent of the appraised “as completed” value.

The Effect on our Borrowers.

It will take some time to fully understand the impact of the HVCRE, but I believe the following will hold true.

  1. A number of lending institution will exit the construction / development lending space; thus eliminating competition.
  2. The cost of construction lending will increase significantly to cover the cost of this additional capital reserve requirement. I’m guessing between 100 & 150 basis points.
  3. More conservative Loan-To-Cost & Loan-To-Value requirements. Leverage will fall to 60% - 65% LTC / LTV.
  4. More competition for stabilized assets. As lenders exit the construction lending space, they will look to place money on stabilized CRE. The improved competition will push spreads down while increasing leverage.

The ultimate impact of HVCRE requirements remains to be seen, but mounting pressure on development costs and downward pressure on land values appear to be inevitable.

ARRIBA CAPITAL CLOSES A $925,000 LAND LOAN IN OCEANSIDE, CA

Arriba Capital (Arriba) successfully closed a $925,000 cash-out refinance, on a 10,000 square-foot lot, located in Oceanside, CA. The new debt paid off the existing maturing loan and funded the necessary permitting fees required by the city. This bridge loan allowed the sponsorship to complete the necessary approvals for a 16,000 square foot mixed-use development, which will be completed in the next 18-months. The 1-year land loan was sized up to 55% LTV, priced at 12.5%, and closed 5 business days.