Finance Mortgage Banking
April 1, 2008
By: Gail Kalinoski, Contributing Editor
Younan Properties Inc. is taking advantage of the instability in the debt markets by forming a new commercial debt group and opportunity fund to invest up to $200 million in underperforming loans and distressed office properties.
Transactions will range from $5 million to $50 million as the fund acquires mispriced mezzanine loans, B notes, whole loans and underperforming first mortgages. Calling it a “natural extension” of the firm’s business, CEO Zaya Younan (pictured) told CPN today it was “a good opportunity for us to be active and purchase some of these assets.” Younan said emotion, fear and overreaction have severely impacted the commercial real estate lending process. He noted that many investment banks have to sell underperforming loans to create cash flow. “A lot of these debts were secured some time ago at much higher interest rates. They cannot deliver to investors the return they promised. They need liquidity to do that. That’s where we come in,” Younan said. “We feel the market will stabilize and recover by the fourth quarter of this year so we want to take a position and buy some of this.”
Since it was formed in 2001, Los Angeles-based Younan Properties has grown in part because of the ability to assess a property’s operating efficiencies and identify ways to reduce cost and add value. Younan said the new group will seek out notes on assets that have been discounted without justification. “We intend to acquire debt instruments where we can actively assist in the management of the property,” he said in a news release. “Increasing cash flows for the property will ultimately contribute to the asset’s ability to meet its debt obligations and provide our investors with superior returns on their investments.”
Younan said the new fund would likely be announcing its first acquisition within the next several weeks. He said they are seeing significant discounts on notes, ranging “anywhere from 75 cents to 90 cents on the dollar, or a 5 to 25 percent discount on the dollar.”
Younan Properties, a privately-held real estate investment group that specializes in acquiring Class A office properties, has accumulated nearly 12 million square feet of assets valued at more than $1.6 billion in key markets in Texas, Illinois and Arizona. It is the largest landlord of Class A office assets in Dallas and the second largest in Houston, where it acquired more than 2 million square feet of office space in 2007. Younan said today the firm’s goal is to become the country’s largest office owner in 2008. In order to do that, he said they must look outside their current target areas of Texas, Illinois and Arizona. They will be doing that through the fund as well as asset acquisitions. One area Younan Properties will be eyeing is New York City, where valuation is dropping. “The prices are becoming more realistic to what they were,” he said. “We’re looking to penetrate those markets.” He said the firm would avoid Florida and California, where it had divested investments several years ago, for at least six to 12 months.
By: Gail Kalinoski, Contributing Editor
Younan Properties Inc. is taking advantage of the instability in the debt markets by forming a new commercial debt group and opportunity fund to invest up to $200 million in underperforming loans and distressed office properties.Transactions will range from $5 million to $50 million as the fund acquires mispriced mezzanine loans, B notes, whole loans and underperforming first mortgages. Calling it a “natural extension” of the firm’s business, CEO Zaya Younan (pictured) told CPN today it was “a good opportunity for us to be active and purchase some of these assets.” Younan said emotion, fear and overreaction have severely impacted the commercial real estate lending process. He noted that many investment banks have to sell underperforming loans to create cash flow. “A lot of these debts were secured some time ago at much higher interest rates. They cannot deliver to investors the return they promised. They need liquidity to do that. That’s where we come in,” Younan said. “We feel the market will stabilize and recover by the fourth quarter of this year so we want to take a position and buy some of this.”
Since it was formed in 2001, Los Angeles-based Younan Properties has grown in part because of the ability to assess a property’s operating efficiencies and identify ways to reduce cost and add value. Younan said the new group will seek out notes on assets that have been discounted without justification. “We intend to acquire debt instruments where we can actively assist in the management of the property,” he said in a news release. “Increasing cash flows for the property will ultimately contribute to the asset’s ability to meet its debt obligations and provide our investors with superior returns on their investments.”
Younan said the new fund would likely be announcing its first acquisition within the next several weeks. He said they are seeing significant discounts on notes, ranging “anywhere from 75 cents to 90 cents on the dollar, or a 5 to 25 percent discount on the dollar.”
Younan Properties, a privately-held real estate investment group that specializes in acquiring Class A office properties, has accumulated nearly 12 million square feet of assets valued at more than $1.6 billion in key markets in Texas, Illinois and Arizona. It is the largest landlord of Class A office assets in Dallas and the second largest in Houston, where it acquired more than 2 million square feet of office space in 2007. Younan said today the firm’s goal is to become the country’s largest office owner in 2008. In order to do that, he said they must look outside their current target areas of Texas, Illinois and Arizona. They will be doing that through the fund as well as asset acquisitions. One area Younan Properties will be eyeing is New York City, where valuation is dropping. “The prices are becoming more realistic to what they were,” he said. “We’re looking to penetrate those markets.” He said the firm would avoid Florida and California, where it had divested investments several years ago, for at least six to 12 months.
Recent Mortgage Banking Headlines
May 15, 2008
May 14, 2008
May 13, 2008
May 13, 2008
May 12, 2008
