Värde Views: Credit Market Update

With market volatility driven by the surge of the Delta variant, U.S. politics and other factors, amidst a continued global vaccine rollout and positive advances towards a new normal, Värde Partners today shares views on the current economic conditions affecting the investment landscape, the evolving opportunity set, and the outlook for credit markets.

Download Värde Views here featuring commentary from Värde Partners’ CIOs Ilfryn Carstairs, Giuseppe Naglieri and Brad Bauer.

About Värde Partners
Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested $85 billion since inception and manages $14 billion on behalf of a global investor base. The firm’s investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde employs more than 300 professionals worldwide with offices in Minneapolis, New York, London, Singapore and other cities in Asia and Europe. For more information, please visit www.varde.com.

Värde Partners Forms JV with Toll Brothers and Harvard Investments to Acquire the Estrella Master-Planned Community in Arizona

MINNEAPOLIS, MN AND GOODYEAR, AZ – Värde Partners, a leading global alternative investment firm, today announced that it has formed a joint venture with Toll Brothers, the nation’s leading builder of luxury homes, and Harvard Investments, a real estate investment and development company, to acquire Estrella in one of the largest active master-planned community purchases in Arizona.

Estrella is a 20,000-acre mixed-use master-planned community in the City of Goodyear, Arizona. Located approximately 17 miles west of Phoenix, Estrella is already home to more than 7,000 families with more than 18,000 remaining developable acres.

The assets acquired include current and future home sites, multi-family and commercial parcels, a golf course, and developer-owned facilities. Estrella will continue to actively develop new neighborhoods for builders, with additional parcels coming online in the near term.

“We believe Estrella represents a compelling opportunity against a backdrop of continued strong demand for housing in major Sunbelt markets and complements our existing portfolio of master-planned communities,” said Brendan Bosman, Managing Director at Värde Partners. “This multifaceted transaction reflects the deep experience we’ve built across U.S. residential land development and homebuilding over the past 28 years. We welcome the opportunity to partner with both a major homebuilder and a well-established development company to grow Estrella as a leading master-planned community.”

“Toll Brothers is excited to partner with Harvard Investments and Värde Partners as we continue to shape the growth of this exceptional community,” said Bob Flaherty, group president for Toll Brothers. “We look forward to being part of the development team and an active builder in Estrella, together with a broad roster of other builders who have been and will continue to be a driving force behind the growth of this extraordinary community.”

“We are excited to add Estrella to our portfolio of properties across the southwestern United States and to work with both Toll Brothers and Värde Partners to apply our collective knowledge to the future growth of Estrella,” said Tim Brislin, Vice President of Harvard Investments. “Our intention for Estrella is to build on its foundation of excellent planning and continue on its reputation as a best-in-class master-planned community.”

Estrella’s amenities include two clubhouses, resort-style pools and a waterpark, 72 acres of lakes, 50+ miles of paths and trails, and a yacht club. The assets acquired also include an award-winning Nicklaus Design golf course at the Golf Club of Estrella.

Future planning includes the continuation of the Lucero and Montecito villages, as well as immediate planning for new villages east of Estrella Parkway. With the active home buyer market, the goal is to increase the variety of new home offerings, the number of builders, and add more Estrella neighborhoods for home shoppers.

About Värde Partners
Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested $80 billion since inception and manages $14 billion on behalf of a global investor base. The firm’s investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde employs more than 300 professionals worldwide with offices in Minneapolis, New York, London, Singapore and other cities in Asia and Europe. For more information, please visit www.varde.com.

Värde has 28 years of experience investing in real estate. Previous investments in master-planned communities include: Daybreak in South Jordan, UT (SLC metro); Windsong Ranch in Prosper, TX (Dallas metro); Vistancia in Peoria, AZ; Verde River in Scottsdale, AZ; and Sunfield in Buda, TX (Austin metro).

About Toll Brothers
Toll Brothers, Inc., a FORTUNE 500 Company, is the nation’s leading builder of luxury homes. The Company was founded over 50 years ago in 1967 and became a public company in 1986. Its common stock is listed on the New York Stock Exchange under the symbol “TOL.” The Company serves first-time, move-up, empty-nester, active-adult, and second-home buyers, as well as urban and suburban renters. Toll Brothers builds in 24 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and Washington, as well as in the District of Columbia. The Company operates its own architectural, engineering, mortgage, title, land development, golf course development, smart home technology, and landscape subsidiaries. The Company also operates its own lumber distribution, house component assembly, and manufacturing operations.

2021 marks the 10th year Toll Brothers has been named to FORTUNE magazine’s World’s Most Admired Companies® list. Toll Brothers has also been honored as Builder of the Year by Builder magazine and is the first two-time recipient of Builder of the Year by Professional Builder magazine. For more information visit TollBrothers.com.

About Harvard Investments
Harvard Investments, Inc. is a real estate investment and development company with real estate holdings throughout the western United States. Harvard combines experience, integrity, and financial stability to create high quality, environmentally sensitive, and profitable communities. Harvard’s Canadian parent, the Hill Companies, is a privately held diversified company involved in real estate development including construction and leasing of commercial office buildings and retail properties, oil and gas production and distribution, broadcasting, surety bonding, and insurance. In 2021, The Hill Companies celebrates its 118th year of continuous family ownership and operation. To learn more visit http://www.harvardinvestments.com/.

About Estrella
Estrella is a 20,000-acre mixed-use master-planned community located in the City of Goodyear, approximately 17 miles west of Phoenix. Estrella features more than 500 acres of parks and open space including 50+ miles of paths and trails and 72 acres of lakes for boating and catch and release fishing, Starpointe and Presidio Residents Clubs, hiking trails, and basketball, volleyball, pickleball, and tennis courts. Estrella is also home to a Nicklaus-design championship golf course, The Golf Club of Estrella. For more information about Estrella, please visit estrella.com.

Värde Partners Closes $602 Million in U.S. Commercial Real Estate Loans

Firm Increases Lending to Hospitality Sector as Traditional Lenders Pull Back

MINNEAPOLIS and NEW YORK – Värde Partners, a leading global alternative investment firm, today announced it closed $602 million in U.S. commercial real estate loan originations across 11 transactions in the third quarter of 2021. In total, Värde has funded $1.7 billion of real estate loans so far this year spanning hospitality, multifamily, office, industrial and mixed-use assets.

“We continue to see significant demand for flexible financing solutions across the commercial real estate landscape, and particularly within the hospitality sector. With nearly every property in some state of transition, Värde’s commercial real estate lending program is focused on providing capital to help businesses navigate the continued impact of the pandemic and position their assets for a strong recovery,” said Jim Dunbar, Senior Managing Director at Värde Partners.

Hospitality Outlook

The pandemic dealt a massive shock to the hospitality sector, one of the hardest-hit markets over the last 18 months. As travel has increased, certain segments of the market have begun to see improved occupancy rates – however, the continued impact of reduced travel and the uncertainty around longer-lasting trends are perpetuating the transitional nature of these assets. Even as hotel valuations have recovered in both public and private markets, operating income is recovering at different rates across markets and by asset type.

Many hotel owners are in need of capital to refinance loans or fund their business plans, such as upgrading or repositioning assets as they emerge from the pandemic. At the same time, many lenders are finding it difficult to advance credit to this sector due to the current operating income levels. The result is an increased demand for shorter-term capital or bridge loans from alternative lenders like Värde.

Värde’s view is that the hospitality sector will ultimately recover and look more like it did pre-pandemic, with new or recently renovated full-service and luxury leisure assets being the first to recover within their individual markets. As such, Värde is focused on lending to quality sponsors with high-potential assets in top U.S. urban and leisure markets.

Third Quarter Loans

Loans closed over the quarter include:

$84 million for the refinancing of an office property in Lewisville, Texas.
$78 million for the refinancing of a hospitality property in Miami, Florida.
$73 million for the refinancing of a multifamily property in Phoenix, Arizona.
$55 million for the refinancing of a hospitality property in Scottsdale, Arizona.
$54 million for the refinancing of a hospitality property in Bloomington, Minnesota.
$53 million for the refinancing of a hospitality property in Nashville, Tennessee.
$48 million for the acquisition of a hospitality property in New York City, New York.
$48 million for the acquisition of a hospitality property in Atlanta, Georgia.
$41 million for the acquisition of a hospitality property in Nashville, Tennessee.
$37 million for the acquisition of an office property in Miami Beach, Florida.
$31 million for the acquisition of an industrial property in Spring Valley, California.

Värde’s CRE Lending Program

Värde has 28 years of experience investing in real estate and credit markets and has originated over $4 billion in commercial real estate loans since 2017. The firm has a dedicated team of experienced origination, asset management and capital markets professionals.

Through its commercial real estate lending program, Värde is a non-recourse, balance sheet lender financing all major asset classes, plus mixed-use and self-storage. Värde focuses on providing flexible capital and certainty of execution to meet the needs of experienced real estate investors.

In May, Värde closed its fourth and largest CRE CLO at $928 million. The asset pool consisted of 23 floating-rate mortgages secured by 29 commercial properties.

About Värde Partners

Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested $80 billion since inception and manages $15 billion on behalf of a global investor base. The firm’s investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde employs more than 300 professionals worldwide with offices in Minneapolis, New York, London, Singapore and other cities in Asia and Europe. For more information, please visit www.varde.com.

Värde Partners Elevates Brad Bauer and Giuseppe Naglieri to Co-CIOs

LONDON – Värde Partners, a leading global alternative investment firm, today announced it has elevated Deputy Chief Investment Officers (CIOs) Brad Bauer and Giuseppe Naglieri to join Ilfryn Carstairs as Co-CIOs. Brad and Giuseppe will share oversight of Värde’s global investment activity with Ilfryn, who is also Co-CEO.

“This is important recognition of the strong leadership that Brad and Giuseppe are already providing alongside me in the CIO function,” said Ilfryn. “Together with Jon Fox as President and Andy Lenk as Deputy CEO, this group represents a cohesive and experienced global leadership team for the firm.”

Based in London, Brad joined Värde in 2007, was named partner in 2013, and was promoted to Deputy CIO in 2019. Also based in London, Giuseppe joined the firm in 2009, was named partner in 2016, and was promoted to Deputy CIO in 2018.

About Värde Partners

Värde Partners Promotes New Global Co-Heads of Business Development and Investor Relations

NEW YORK and LONDON – Värde Partners, a leading global alternative investment firm, today announced it has promoted Shannon Gallagher and Mona Girotra to Global Co-Heads of its Business Development and Investor Relations (BDIR) group reporting to the firm’s President, Jon Fox.

“Shannon and Mona have great relationships with our investors and have consistently demonstrated strong results and leadership skills,” said Fox. “I’m excited to see them take this next step and I look forward to working closely with them and our investors as they oversee our fundraising and IR team.”

Based in London, Shannon joined Värde in 2018 and had previously been responsible for leading business development in Europe, the Middle East, and Asia Pacific. Mona joined Värde’s New York office in 2018 and had previously led the team’s Product Specialist and Consultant Relations functions.

About Värde Partners

Flynn Properties and Värde Partners Form Joint Venture, Acquire 20 Select Service Hotels

$211 million deal Includes 11 Marriott®- and Nine Hilton®-Branded Hotels

SAN FRANCISCO and MINNEAPOLIS – Flynn Properties Inc. (“Flynn”), owner of commercial real estate, luxury resorts and select service hotel properties in America and abroad, in a joint venture with Värde Partners, a leading global alternative investment firm, today announced that it has acquired 20 select service hotels – 11 Marriott®- and nine Hilton®-branded locations – in a $211 million deal with Apple Hospitality REIT (NYSE: APLE), a publicly traded real estate investment trust (REIT) that owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the United States.

The newly acquired properties, located throughout the Sunbelt, Northeast, Pacific Northwest and Midwest, will undergo capital improvements over time. Flynn Properties will serve as the managing member of the joint venture, charged with day-to-day asset management of the portfolio and execution of the business plan.

“We are excited to announce the addition of these Marriott- and Hilton-branded hotels to our portfolio of properties,” said Greg Flynn, Founder, Chairman and Chief Executive Officer of Flynn Properties. “This acquisition is part of a broader business strategy by Flynn Properties to increase its select service hotel footprint, which proved to be one of the best performing sectors in the industry. We are also excited by the caliber of properties included in this deal, as both Marriott and Hilton are global hospitality icons known for hosting some of the world’s most loyal travelers for business and leisure while offering exceedingly robust guest loyalty programs, which we believe will be a key source of guest revenue and retention.”

“Värde is pleased to partner with an experienced sponsor in Flynn Properties to acquire a portfolio of well-positioned hospitality properties in attractive locations with compelling market supply/demand dynamics. These properties have fared well through the pandemic, demonstrating the healthy demand for select service hotels and the strength of their brands,” said Francisco Milone, Head of Real Estate Special Situations at Värde Partners. “The hotel sector has experienced an unprecedented shock, with extreme levels of cash-flow disruption driving a significant demand for capital. As the sector begins to recover from the pandemic, we believe there will be opportunities to invest selectively in high quality assets that are well positioned to capitalize on the return of business and leisure travel.”

This acquisition will bring Flynn Properties’ select service hotel portfolio to 26 properties, complementing the six existing Marriott-branded hotels it currently owns. Flynn Properties is a division of San Francisco-based Flynn Holdings, which has two principal businesses: real estate and restaurants. Flynn Properties’ prior hotel investments include six Marriott Courtyards as well as four super-luxury resorts: Esperanza in Los Cabos, Mexico, the Carneros Resort & Spa and Solage, both located in Napa, California, and the Hotel Madeline in Telluride, Colorado. Its commercial investments consist primarily of tech-oriented office buildings on the West Coast totaling over 3 million square feet. Its affiliate, Flynn Restaurant Group LP, is the largest franchise restaurant operator in the world and one of the 20 largest foodservice companies of any kind in the United States, owning and operating 2,400 restaurants in 44 states generating $3.6 billion in sales and employing approximately 73,000 people.

Värde has over 25 years of experience investing in real estate, including financing and owning hospitality properties. The firm recently completed the sale of a portfolio of eight European luxury hotels operating under The Dedica Anthology brand in September 2020 after transforming the hotel group by appointing a best-in-class management team, refinancing the business, and executing an ambitious investment program.

About Flynn Properties, Inc.

Flynn Properties Inc. has substantial experience in commercial and hospitality real estate investment. Founded in 1994 and based in San Francisco, CA, Flynn Properties has owned in excess of 3 million square feet of tech-oriented office buildings on the West Coast. In addition to 26 Marriott- and Hilton-branded select service hotels, Flynn Properties’ hospitality investments also include the luxury resorts Esperanza, located in Los Cabos, Mexico, the Carneros Resort and Solage, both located in the Napa Valley, and the Hotel Madeline in Telluride. For more information, visit www.flynnholdings.com.

About Värde Partners