Commercial refinancings are happening — but you better have the country’s largest e-commerce company as a tenant.
Preylock is close to scoring a $1.1 billion refinancing package for a portfolio of Amazon.com warehouses across the country, according to ratings agency KBRA and a source familiar with the matter. The commercial mortgage-backed securities deal is expected to close later this month.
Preylock declined to comment.
Goldman Sachs is originating a roughly $1 billion non-recourse loan, which will have a fixed interest rate of 5.38 percent. Preylock is also working to close a $150 million mezzanine loan, KBRA said, but did not disclose the lender. Together, the debt amounts to about $1.1 billion.
With that rate, the CMBS package will be one of the lowest fixed-rate deals to close in the last year, as the Federal Reserve has hiked interest rates. The 5.38 percent rate is only tenths of a percentage higher than key benchmark interest rates; on Aug. 4, the secured overnight financing rate was 5.3 percent.
For comparison, in July Oaktree Capital Management and Trinity Investments scored a $515 million CMBS deal with an interest rate of 7.75 percent to refinance a resort in Hawaii.
With a 5.38 percent interest rate, Preylock will pay about $4.9 million a month to service the debt.
The Amazon deal backs 12 warehouses totaling 8.9 million square feet across 10 states, according to KBRA. All of the warehouses are fully leased to Amazon on triple-net leases — a deal where the tenant agrees to pay all property expenses, including taxes, insurance and maintenance, in addition to rent and utilities. The portfolio has an average lease term of about 14 years, KBRA said in its report.
Last year, Preylock scored a $581 million, floating-rate deal for eight Amazon warehouses. Instead of opting to extend the loan by another year, Preylock refinanced the properties with four other Amazon-leased warehouses.
For that deal, the eight warehouses were valued at $1.3 billion, or $209 per square foot, according to a Moody’s report at the time.
Preylock’s largest limited partner in the Amazon warehouses is a Singapore-based sovereign wealth fund that focuses on real estate, according to a source familiar with the matter. Other limited partners include Bahrain-based GFH Financial Group and Reinsurance Group of America.