Värde Partners Closes $833 Million in U.S. Commercial Real Estate Loans in Second Quarter
Commercial Real Estate Lending Outlook Remains Strong
MINNEAPOLIS and NEW YORK – Värde Partners, a leading global alternative investment firm, today announced it closed $833 million in U.S. commercial real estate loan originations in the second quarter of 2021, for a total of $1.1 billion funded this year. The 13 transactions completed in the second quarter span hospitality, multifamily, office, and mixed-use assets across five states.
“As the economy re-opens and properties recover occupancy, the commercial real estate market is driving increased demand for transitional capital, particularly for hospitality, office and multifamily properties. We expect this need to grow over the coming years as we see a re-calibration of how tenants and consumers utilize space in the wake of the pandemic,” said Jim Dunbar, Senior Managing Director at Värde Partners.
“This type of financing benefits from a tailored, flexible approach. Working with borrowers to understand their business plans, Värde is able to offer reliable capital that allows businesses to navigate the shifting environment and position for the future by renovating or evolving assets.”
Commercial Real Estate Market Outlook
The Covid-19 pandemic accelerated existing trends in various real estate sectors, but many questions remain about how these trends will play out in the medium and long term.
Hospitality was the most impacted sector. A large portion of the industry underwent significant layoffs and negotiated forbearances with their lenders. Although travel has picked up and trends are improving, various segments and markets are recovering at different rates. We expect hotel owners will continue to require capital to refinance loans and position their assets for a strong recovery.
To date, we observed that Covid has had a more muted effect on office fundamentals due to the long-term nature of underlying leases and lower level of transactions. However, we expect tenants will have a near-universal need to re-evaluate their space requirements over the coming years as leases expire. Underneath it all, the broader questions around remote work and trends toward central business districts vs suburban locations have yet to be answered.
Multifamily continues to benefit from an undersupply of housing units across the U.S. and attractive liquidity given agency financing. We expect the multifamily market to experience some near-term volatility as government stimulus tapers off and as urban locations see an impact to valuations as a result of the trend toward the suburbs. Nevertheless, the fundamentals of population growth and the reality that housing is an essential living expense make this a particularly interesting market.
In addition to these sector trends, the commercial real estate market has undergone a change in the lender landscape over the past year, with many lenders altering their focus due to the effects of the pandemic. The result is an underserved and fragmented market in our view, particularly for borrowers seeking loans in the $50-100 million range.
Värde’s CRE Lending Program
Värde has 27 years of experience investing in real estate and credit markets and has originated over $3.5 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.
Second Quarter Loans
Loans closed over the quarter include:
- $96 million for the refinancing of a mixed-use property in San Francisco, California.
- $91 million for the refinancing a portfolio of office properties in San Diego, California.
- $91 million for the refinancing of a hospitality property in Los Angeles, California.
- $84 million for the acquisition of a portfolio of office properties in Broomfield, Colorado.
- $80 million for the refinancing of a multifamily property in Seattle, Washington.
- $74 million for the refinancing of a hospitality property in Aspen, Colorado.
- $64 million for the refinancing of a multifamily property in Allen, Texas.
- $63 million for the refinancing of an office property in Beverly Hills, California.
- $59 million for the refinancing of a multifamily property in Kissimmee, Florida.
- $42 million for the acquisition of a multifamily property in Katy, Texas.
- $41 million for the acquisition of a hospitality property in Seattle, Washington.
- $27 million for the acquisition of a multifamily property in Dallas, Texas.
- $21 million for the acquisition of a multifamily property in Dallas, Texas.
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.