Mesa West Capital Originates First Loans Out of Newly Formed Special Situations Platform
By: Mesa West Capital
The five-year floating-rate mezzanine loans are the first out of Mesa West Capital's newly formed special situations lending program, as the Los Angeles-based private lender broadens its scope to offer owners and investors a wider variety of financial solutions throughout the capital stack.
Since its founding in 2004, Mesa West Capital has provided real estate borrowers with more than $20 billion in short- to medium-term, first mortgage debt for the acquisition and recapitalization of core and value-add transitional real estate assets throughout the United States. With the special situations program, the Los Angeles-based private lender has expanded its lending platform to now include rescue capital, mezzanine and preferred equity up to $100 million secured by a wide variety of commercial real estate assets.
"Our focus continues to be on financing high quality real estate, with strong sponsors and in markets that have durable long-term fundamentals,"
In the larger of the two financings, Mesa West Capital provided Chicago-based LaSalle Investment Management with a $37 million mezzanine loan to refinance and stabilize 123 N. Wacker Drive, a 30-story, 549,000-square foot Class A office building in Chicago's West Loop. The building, which had not been renovated since it was built in 1986, was acquired by La Salle in 2017. After a two-year, multimillion capital improvement program, LaSalle increased occupancy from 53 percent to 69 percent prior to the onset of the pandemic, according to Matt Snyder, who led the Mesa West Capital origination team out of the firm's Chicago office.
"It took a black swan event to stop LaSalle's positive leasing momentum at 123 Wacker," said Snyder. "Benefiting from an A+ riverfront location, this newly renovated and highly amenitized building has proven to be competitive with the more expensive new construction and will do well as the market recovers."
Mesa West Capital also provided the joint venture of Montana Avenue Capital Partners and Arsenale SGR with a $10 million mezzanine loan to facilitate the sale/lease-back of a four-building flex portfolio in San Diego CA with Millennium Health
The financing is secured by the former corporate headquarters, warehouse and lab facilities of Millennium Health all located in the Rancho Bernardo submarket in northern San Diego County. Millennium Health, an accredited specialty laboratory which provides medication monitoring and drug testing services, will continue to occupy adjacent buildings at 11501 Rancho Bernardo and 16981 Via Tazon under long-term leases as part of the sale leaseback. Millennium Health also signed short-term leases for the two remaining buildings at 16980 Via Tazon and 15330 Avenue of Science. A portion of the overall loan proceeds will be used to pay for costs associated with stabilizing the buildings upon the expiration of the short-term leases.
"Unlike traditional office users, many flex users cannot work from home and need physical space to house inventory and equipment, so the sector has fared well during the pandemic," said Mesa West Vice President Brian Hirsh who originated the financing. "Rancho Bernardo is a tight market with limited availability for large blocks of space. Due to the high‐functionality, large contiguous floorplates and location along the I‐15 freeway, 16980 Via Tazon and 15330 Avenue of Science should attract many flex tenants once Millennium Health vacates the short-term lease space later this year."
Keith Largay of JLL in Chicago arranged the financing on 123 Wacker. Aldon Cole of JLL's San Diego office arranged the financing on the Millennium Health sale/leaseback.
About Mesa West Capital, LLC
Mesa West Capital (www.mesawestcapital.com) is a leading commercial real estate debt fund manager and portfolio lender. With offices in Los Angeles, New York, Chicago and San Francisco, Mesa West has been one of the leading providers of commercial real estate debt since its founding in 2004. Mesa West provides non-recourse first mortgage loans for core/core-plus, value-added or transitional properties throughout the United States. Mesa West's lending portfolio includes all major property types with loan sizes ranging from $20 million up to $400 million. Since inception, the firm has sourced and closed more than 300 transactions totaling over $20 billion.
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