San Francisco, CA – July 11, 2016 – CBRE Capital Markets’ Debt & Structured Finance team has secured $21,200,000 in non-recourse financing for two prime located retail/gym properties; the 24 Hour Fitness in Portland’s burgeoning downtown Pearl District and the 24 Hour Fitness in Tualatin, a scenic and vibrant suburb of Portland.
Michael Walker, Senior Vice President of CBRE’s San Francisco, California, office arranged the financing on behalf of an entity owned and controlled by Metro Commercial Realty. CBRE secured long term, fixed-rate financing with prepayment flexibility from a West Coast bank. The financing secured was for a loan term of 15 years and carried an interest rate of approximately 3.64%.
The two assets have been occupied by 24 Hour Fitness for over 10 years and each has a healthy membership base. The 24 Hour Fitness “Sport” concept in the heart of Portland’s Pearl District is a state-of-the art facility offering its members a wide range of exercise options and amenities including spin, weights, basketball and an indoor swimming pool. The Tualatin property is 24 Hour Fitness’s “Super Sport” concept and offers all the traditional “Sport” concept amenities and more, including sauna & steam rooms, racquetball, TRX suspension equipment, a whirlpool and more.
“These properties are strategically located in key Portland locations to best serve the impressive 24 Hour Fitness membership base. The long term leases Metro Commercial secured from its tenants, coupled with the growth of Portland’s economy made this opportunity very attractive to a wide swath of lenders. Ultimately we were successful securing extremely cheap capital on a 15 year basis while maintaining prepayment flexibility,” said Michael Walker. “Typically, long term loans carry a higher cost of capital and lenders like to structure against early prepayment to protect their yield. However, through our process, we were able to secure long term debt in the mid 3% range and maintain prepayment flexibility through a step-down prepayment structure. We achieved all the sponsor’s objectives,” Mr. Walker said.
Nicknamed “The Silicon Forest,” the Portland Metro area is home to notable tech companies including Intel, Airbnb, Puppet Labs, Smarsh, Jama Software and eBay. Portland is also a major hub for sportswear and apparel companies including Nike, Adidas and Columbia Sportswear.
More than ever before, both institutional and private capital are in a race to invest in Portland’s growing economy. The primary attractions are larger yield spread, lower price per square foot, strong absorption trends and significant rent increases.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
