$30.4M CMBS Loan on Aksoylu Properties' Manassas Retail Portfolio Detailed
UBS and Barclays have filed a prospectus for the $1.456B UBS-BB 2012-C4, a CMBS conduit deal offering 91 loans on 131 properties. Included is information on the largest assets in the deal, one of which is the $30.4 million fixed rate loan secured by Evergreen Terrace and Shops of Signal Hill, two shadow anchored retail centers in Manassas, VA.
Tthe Manassas Retail Portfolio loan has a 10-year term and amortizes on a 30-year schedule after a six month interest-only period. The loan accrues interest at a fixed rate equal to 4.9000%.
Loan proceeds were used to refinance existing debt on the Manassas Retail Portfolio Loan of approximately $26.1 million, pay closing costs of approximately $646,893 and return equity to the sponsor in the amount of $3.1 million.
Based on the sponsor’s total reported development cost of the Manassas Retail Portfolio Properties of $39.0 million, the Manassas Retail Portfolio Properties represent an aggregate loan to cost ratio of 77.9%.
The borrower, Lazuri Investments, LLC, is a bankruptcy-remote, special purpose entity with one independent director in its organizational structure, owned by Ahmet Aksoylu, the Sponsor.
Ahmet Aksoylu has been active in real estate development for 34 years on various projects in the District of Columbia and currently has approximately 1.2 million sq. ft. under management. Aksoylu reported a net worth in excess of $70 million and serves as the managing member of the Borrower. He is the founder of Aksoylu Properties, LLC.
The Evergreen Terrace Property and The Shops of Signal Hill Property are located across the street from one another in Manassas, Virginia, which is 30 miles west of Washington, D.C.
The Borrower developed the properties between 2007 and 2009 that included a 90,000 sq. ft. retail/office building, which will not be part of the proposed collateral.
The Shops of Signal Hill Property is shadow anchored by an Aldi Grocery Store. The Manassas Retail Portfolio Properties contain 730 surface parking spaces, reflecting an overall parking ratio of 5.68 spaces per 1,000 square feet.
Evergreen Terrace Property
The Evergreen Terrace Property is a one story multi-tenant shopping center containing 64,775, sq. ft. There are two retail buildings and four ground leased outparcels.
The Evergreen Terrace Property is located along the eastern side of Liberia Avenue, just south of Signal Hill Road near the city of Manassas, Prince William County, Virginia. As an additional draw, the Evergreen Terrace Property contains an approximately 90,000 sq. ft. office building that contains a Gold’s Gym, University of Phoenix, and several medical office suites.
Although not included in the loan collateral, the office building provides additional traction for the center to draw in customers for the inline retail and pad spaces. In addition, there is a car wash associated with the Evergreen Terrace Property that will not be part of the collateral.
As of August 1, 2012, the Evergreen Terrace Property was 96.9% leased by 19 tenants contributing 52.9% of the total underwritten base rent for the Manassas Retail Portfolio Properties.
The three largest tenants at the Evergreen Terrace Property are Children of America (8,500 sq. ft. under a ground lease, lease expiration: 5/31/2020); Patient First (Pad) (6,552 sq. ft. under a ground lease, lease expiration: 5/1/2030); and Red Robin (5,786 sq. ft. under a ground lease, lease expiration: 7/31/2024).
Other tenants include Dunkin Donuts, Panda Express, Atlantic Wireless, Jimmy John’s and an outparcel consisting of Longhorn Steakhouse.
The Shops of Signal Hill Property
The Shops of Signal Hill Property is a one story multi-tenant shopping center containing 63,780, sq. ft. and is part of a condominium regime.
Units A, C, D and G are part of this collateral. Aldi, the shadow anchor, occupies Unit B and Northwest Federal Credit Union occupies Unit E and are not part of the collateral. Also, vacant pad sites Unit F and H are not part of the collateral.
The Shops at Signal Hill Property is located along the western side of Liberia Avenue, south of Signal Hill Road, within the city of Manassas, Prince William County, Virginia. The property is shadow anchored by an Aldi Supermarket, which reportedly has sales of over $6.0 million, or $335 per sq. ft.
As of August 1, 2012, The Shops of Signal Hill Property was 92.0% leased by 16 tenants contributing 47.1% of the total underwritten base rent for the Manassas Retail Portfolio Properties.
The three largest tenants at The Shops of Signal Hill Property are HomeTrends (13,319 sq. ft. leased to an affiliated entity, lease expiration: 11/30/2027); Dollar Tree (9,980 sq. ft., lease expiration: 11/30/2013); and Laser Tag (7,500 sq. ft. lease expiration: 12/1/2017). Borrower reported Dollar Tree sales of $167 per sq. ft. with occupancy costs of 13.8% for Dollar Tree.
The suburban Virginia Retail market contains 39,630,000 square feet of space. The Prince William County submarket, where the Manassas Retail Portfolio Properties are located, contains 9,649,000 square feet, or 24.3% of the region’s inventory. Average rent in the Prince William County submarket is $20.58 per square foot, which represents a growth rate of 1.5% from year-end 2011.
Based on the appraisal, over the next five years, average asking rents are expected to increase between $20.66 per square foot in 2012 to $22.57 per square foot in 2016. As of the second quarter 2012, the vacancy rate declined to 7.7% from 8.5% in 2009.
Based on rental comparables, the appraiser estimated market rents to be $18.00 per square foot for junior anchors, $28.00 per square foot for in-line tenants, $25.00 per square foot for large in-line tenants, and $34.00 per square foot for restaurants. Market rents for outparcels were estimated to be $125,000 to $158,000 per year. In addition, the appraiser estimated a stabilized vacancy/collection loss rate of 6.0%.