Customer Goals

It was one of 2008’s landmark financings – a nearly one billion dollar financing secured by 34 properties across 12 states closed in under 45 days. For iStar Financial Inc., secured single-source financing from GE Capital Real Estate proved to be the fastest and most cost-effective solution in a difficult credit environment. As a leading publicly traded finance company, iStar Financial provides investment capital to high-end private and corporate owners of US commercial real estate. Holliday Fenoglio Fowler, LP brokered the transaction.

The GE Capital Real Estate Solution

To meet iStar’s capital needs, GE Capital Real Estate’s New York office agreed to provide $960 million in adjustable rate, interest-only first mortgage financing. The loan is secured by 34 triple-net-leased single-tenant office, research and development, and industrial properties in 12 states. The portfolio of properties totals nearly 12 million square feet and is currently 99.6 percent occupied with an average lease term of 9.2 years. iStar will use the net proceeds of the three-year floating rate, cross-collateralized and cross-defaulted loan to retire existing debt obligations.

Funding of approximately $810 million occurred at the initial closing of the financing. The balance of the funding, which was subject to the finalization of additional loan documentation, was provided by the end of the second quarter of 2008. The three-year financing is pre-payable in 20 months. Despite the size and complexity of the deal, GE Capital Real Estate was able to close the transaction in less than 45 days.

A Win-Win Relationship

For this important transaction, iStar required a financing partner that could deliver timely and dependable execution. The speed in closing the transaction helped iStar position itself longer-term to take advantage of the new, more attractive lending environment. No other single lender could have made the deal happen given the turmoil of the credit market.

For GE Capital Real Estate, the iStar financing represents the largest debt deal of 2008 and another example of the ability to structure a huge, complex deal very quickly. The loan is cross-collateralized and cross-defaulted, which is more secure than individual loans on each property. If one property loses a tenant and has cash flow problems, for example, the other properties can make up the difference.

According to Real Estate Forum, it was the number one financing deal of 2008. Read more.