Customer successes

Background and Customer Goals

Customers come back again and again to GE Capital Real Estate – in part for our reliability in completing large and complex deals, even during turbulent economic times. One such customer is Vesta, a leading Mexican developer of industrial properties, which had a pipeline of industrial projects totaling some 5 million sq.ft. for 2008 & 2009. Due to global market dislocation, Vesta needed a reliable source for $169 million in new financing to complete the planned projects and continue its business growth. Meanwhile, Vesta’s new institutional investors were pressuring management to increase its short-term liquidity and diversify its sources of financing.

Vesta has been a customer since 1999; before this most recent transaction, GE Capital Real Estate had provided some $246 million in debt financing (including a $15 million revolving line) cross-collateralized by a 54-asset industrial portfolio totaling six million square feet.

The GE Capital Real Estate Solution

The financing solution proposed by GE Real Estate was complex, but addressed both Vesta’s needs and the realities of the new economic landscape. We refinanced our existing $231 million loan and slightly reduced the spread over SWAPS. To acquire new properties and expand existing ones, Vesta needed new financing for multiple industrial properties in a variety of markets across Mexico. Our solution was to provide up to $169 million through on-book, fixed & variable rate financing that consisted of:

• Up to $96.4 million to acquire fourteen properties, finance five expansions to existing properties, and to fund construction of two new build-to-suit properties
• Up to $30 million for a revolving line of credit
• A $42.6 million uncommitted line for future BTS, construction and acquisition projects.

To accommodate Vesta’s need for improved cash flow, we provided a longer amortization schedule for part of the new funding. Vesta also sought our help in creating more efficient ways administer its obligations. We assisted in migrating collateral to a more efficient guaranty trust structure that reduced Vesta’s administrative costs related to collateral guarantees. We also modified existing Partial Release Provisions and Transfer of Borrower Interest structure to be consistent with Vesta’s investment strategy. In return, to reflect new market realities at the April 2008 closing, Vesta posted a significant amount of additional collateral, including more than 8.85 million sq.ft. of land, as well as four spec buildings.

A Win-Win Relationship

The complex transaction cemented Vesta’s long-term relationship with GE Capital Real Estate Mexico. Creating and completing the financial solution was possible because we understood Vesta’s growth strategy, listened to the customer’s needs and have a long-term commitment to the Mexican market. To close the deal on the customer’s timetable, the GE Capital Real Estate team coordinated its internal capabilities and worked effectively with outside environmental, engineering and legal consultants. All Vesta’s goals for lower cost financing were met. Our fast cycle time for closing the deal means that Vesta’s development pipeline can proceed on schedule.