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Montgomery Washington Tower One

Montgomery Washington Tower One

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Published by g4nz0
Offering of 10-year term mortgage loan
Offering of 10-year term mortgage loan

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Published by: g4nz0 on Nov 19, 2009
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11/18/2009

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Montgomery Washington Tower
Commercial Mortgage Finance
$65MM First Mortgage Loan
Citigroup (“Citi”) is offering a $65MM first mortgage loan. This mortgage loan provided refinancing on MontgomeryWashington Tower, a 263,515 SF Class A office property located at 65 Montgomery Street in San Francisco, CA.
Capital Structure
 Approximate Face Amount Cumulative As-Is LTV % UW Cumulative DSCR 
First Mortgage Loan $65,000,000 58.9%1.19x
 
The information and data contained herein (this “Information”) is made available by Citigroup Global Markets Realty Corp. (“CGMRC”) and/or affiliates thereof solely for review and use by prospective investors orpurchasers in connection with their evaluation of potential investments in or purchases of potential mortgage loans or subordinate interests therein that are secured by commercial real properties, potential mezzanineloans that are secured by direct or indirect ownership interests in the borrowers under such mortgage loans, potential participation interests in such mortgage loans, mezzanine loans or portions thereof and/or securitiesthat would evidence direct or indirect ownership interests in or that are directly or indirectly secured by such mortgage loans, mezzanine loans and participation interests. The review or use of this Information for anyother purpose is strictly prohibited. Neither CGMRC nor any of its affiliates has verified any of this Information. Neither CGMRC nor any of its affiliates will make any representation or warranty, express or implied,as to the accuracy or completeness of all or any portion of this Information or have any liability for any representations (express or implied) contained in, or for any omissions from, this Information. This Informationdoes not purport to be all-inclusive or to contain all of the information that may be material to a prospective investor’s or purchaser’s decision to invest or purchase. Each prospective investor or purchaser must make itsown decision regarding the extent to which such prospective investor or purchaser should rely on this Information in considering a potential investment or purchase and must perform its own independent investigationand analysis of the transactions. This Information may be based upon third party information which reflects assumptions by such party and may not be indicative of the present or future circumstances of the commercialreal properties that are the subject of this Information. If and when the words “expects”, “intends”, “anticipates”, “estimates” and analogous expressions are used in statements contained in this Information, suchstatements are forward-looking statements the accuracy of which is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected (including, withoutlimitation, the effects of general, regional and local economic conditions, real estate market conditions and governmental regulations and taxes and the risk of losses from terrorist activity, fires, floods and other naturaldisasters). Any forward-looking statements speak only as of their date. None of CGMRC, its affiliates or any other person or entity will have any liability for any change in events, conditions or circumstances on whichany such forward-looking statement is based. This Information is strictly confidential and may not be disclosed to any person or entity without the express authorization of CGMRC.
Transaction Overview
 
In June 2006, Citi provided fixed-rate refinancing in the amount of $65MM ($247/SF), to be secured by Montgomery WashingtonTower (the “Loan”). Proceeds from the loan were used to retireexisting debt in the amount of $45.6MM (plus pre-payment chargesof approximately $4MM), to buy-out the limited partnership for anamount of $14.7 and to cover closing costs.
 
The borrower originally developed the subject property in 1984, andthe balance sheet for Washington Montgomery LP showed aaggregate cost basis of approximately $43.8MM as of 12/31/07,which included the following assets: building and improvements($28.1MM), tenant improvements ($7.3MM), furniture, fixtures, &equipment ($1.6MM), and land ($6.8MM). The sponsor, WarrenSpieker, also invested an additional $20MM of equity in theproperty for a total cost basis of $63.8MM.Loan Terms
 
The loan exhibits a 1.19x DSCR and 58.9% LTV.
 
10-year term expiring June, 2016
 
First 60 payments of interest only, followed by 30-year amortization
 
Locked out through and including the earlier of (i) June 5, 2010, or(ii) two years after the issue date of the REMIC trust established inconnection with the final securitization involving the loan, followedby defeasance, then open for the last 3 payments.
 
Tax, Insurance and Replacement reserves are springing upon anevent of default.
 
The borrower deposited $3MM in a segregated account at closing tobe used only for the payment of leasing costs at the property.Property Description
 
The subject property consists of the first 18 floors of a 25 storybuilding located at 655 Montgomery Street in San Francisco, CA(the “Property”).
 
The Property includes 257,863 SF of Class A office space on the 4ththrough 19th floors and retail space on the 1st floor and anapproximately 24,900 SF, 125-space parking garage portion on the2nd and 3rd floors of the 403,063 SF building. The subject is acondominium ownership. The property was developed by thecurrent sponsorship in 1984. Building amenities include exceptionalviews, on site parking availability and a health club facility.
 
The Property is subject to a ground lease on 19.1% of the land. Theground lease was effective 8/1/1981 and expires 7/31/2080. Thereare no renewal options. The current annual ground rent is $208,080NNN (paid monthly). The rent increases every 5 years by CPI andthe next increase will be 8/1/2012.
 
The building is a condominium ownership and is one of twoassociations owning 655 Montgomery Street. The Property is thecommercial condominium. The second is a residential condominiumthat consists of 33 residential units (approx. 100,000 SF) and ahealth club and pool (shared with the commercial condominium) onthe 20th through 26th floors.
 
The Property is 79.0% leased to 39 tenants. The largest tenant isBank of America Securities (“BofA”) occupying 19.6% of netrentable area. The BofA lease expires in August 2010. The secondlargest tenant is Expedia, Inc. (“Expedia”) occupying 16.8% of netrentable area. The Expedia lease expires in June 2013. The thirdlargest tenant is SuccessFactors occupying 6.4% of net rentablearea. The SuccessFactors lease expires in August 2010.Location / Market
 
The Property is located within the downtown Financial District inSan Francisco, CA. The Property is located within the FinancialDisctrict office submarket.
 
Per the Summer 2008 TWR Office Outlook, the Financial Districtsubmarket consisted of 28,800,000 square feet, with a reportedvacancy of 7.8% and average asking rents at $41.10 psf gross.
 
The Property was underwritten to a weighted average base rent of $31.24 psf, with a 20.2% vacancy factor.PerformanceSponsorship & Management
 
The borrowing entity is Montgomery-Washington Tower, LLC, aspecial purpose entity structured to be bankruptcy remote (the“Borrower”). The sponsors of the borrower are Warren E. Spieker,Jr. and Patrick J. Gilligan.
 
Mr. Spieker formed Spieker Properties in 1993 with a $400+ millionIPO, with Goldman Sachs and Merrill Lynch as the leadunderwriters. From 1993-2001, the portfolio grew from 11 to 42million SF, with respective values of $800 million to over $6 billion.In July 2001, Equity Office Properties acquired Spieker Propertiesin a transaction valued at over $7.2 billion. At the time, it was thelargest real estate company in the world. Mr. Spieker continuestoday as Managing Partner of Spieker Partners, with a focus onlarge scale projects and independent living, assisted living andskilled nursing care centers.
Time Period 2007
 
2008
 
T-12 3/09
 
UW
 
NOI 4,213,702 5,092,633 5,540,851 5,938,476

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