CINCINNATI – Cushman & Wakefield announced today that firm has secured a $35.50 million permanent. CMBS loan and a $34.68 million construction loan from Deutsche Bank for the financing of AT580, a 17-story mixed-use tower located at 580 Walnut Street in the Cincinnati CBD. Phil Mudd and Brad Geiger were exclusive agents for owner/developer Anderson Birkla Investment Partners, LLC.
Anderson Birkla acquired AT580 out of receivership in 2013 and embarked on redeveloping the office/retail property with office, retail, garage and multifamily components. Anderson Birkla condominiumized each of the four individual components and sought two separate loans totaling $70.18 million, which would not be cross collateralized. Only the office, retail and garage condominiums secured permanent financing. Only the multifamily condominium secured the construction loan in an environment with increasingly strict multifamily lending standards.
The investor hired Cushman & Wakefield to source both 10-year, long-term debt for the office/retail/garage piece and short-term construction debt of three to five years for a new construction loan to take out the existing construction loan – while the project was still under construction – and repay mezzanine financing. Securing financing for AT580 required extensive efforts from Cushman & Wakefield’s local property management and leasing teams, both instrumental in the property’s operations for years, as well as local capital markets and research teams and Mudd and Geiger, who are based in Washington, DC.
While highly complex, the redeveloped building had a number of factors in its favor. AT580’s office component is currently fully leased to Fifth Third Bank, while the retail component is more than 80 percent leased to a diverse roster of tenants. Garage revenues have increased each of the past three years, and the 180-unit multifamily component has seen the absorption rate surpass all estimates.
“AT580 offered an unique, exceptional and challenging financing opportunity in one of the most dynamic cities in the country,” said Mudd, Executive Managing Director of Cushman & Wakefield. “To counter a stringent multifamily construction lending environment and meet Anderson Birkla’s preference of doing both loans with the same lender, we leveraged the multifamily financing piece off of the more attractive, cash-flowing commercial piece. If a lender wanted to finance the commercial component, they would have to do the multifamily component as well.
“Ultimately, its dedicated ownership and location in the heart of the Cincinnati CBD renaissance enabled the various components of AT580 to attract and retain major credit tenants and, consequently, favorable construction and long-term financing via Deutsche Bank,” Mudd concluded.
Added Geiger, Cushman & Wakefield Vice President, “Our local property management, leasing and capital markets team understood the vision of Anderson Birkla’s repositioning plan and were instrumental in crafting a story for rebranding and redevelopment. We then leveraged the strong credit of the newly signed lead tenant and communicated positive leasing momentum in real-time. We were able to successfully secure $70.18 million with two separate loans to fit the sponsor’s needs, which also allowed the borrower to build a cash reserve to meet future cash needs during construction.
“The bifurcation of the multifamily component’s expenses from historical operating statements was undoubtedly a major obstacle, but we were able to overcome the challenges by evaluating all possible alternatives and engaging resources within the Cushman & Wakefield platform to give us advantageous market knowledge and great delivery,” Geiger said.
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.