ValueXpress has arranged a $15-million CMBS conduit loan for the refinance of a 1-million-square-foot warehouse and light manufacturing industrial park located in Ambridge, Pennsylvania, 15 miles north of Pittsburgh. The property features 22 buildings that were constructed in stages between 1920 and 1968. In 1991, two new buildings, 20,000 square feet and 11,000 square feet, respectively, were built.
The property was acquired by the owner in June 1988 with the objective of undertaking a major physical renovation and conversion to a multiple-tenant warehouse and industrial park. The property was significantly underperforming at acquisition with occupancy of 32%. The sponsor has invested over $11 million in the project to bring occupancy close to 80% and increase revenue from $1 million annually to over $4 million. In recent years, the economic benefit from natural gas fracking has created increased activity in the Pittsburgh market and for the subject property. For example, Shell purchased a site within 10 miles of the Ambridge Regional Center as the company evaluates constructing a multi-billion-dollar ethylene cracker at the site.
The transaction was structured with a 10-year term and a 20-year amortization schedule. The loan proceeds provided a substantial return of equity to the sponsor, reflecting the substantial value that has been created in the project. In addition, the loan features a very attractive interest rate in the mid-4% area.