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3/20/12
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Highland Realty Capital has arranged $10.75 mil in debt financing for Park Plaza, a nine-story, 80.7k sf office building in downtown Oakland. Park Plaza is located at 1939 Harrison Street, three blocks east of the 19th Street Oakland BART underground-rail transit station. Originally constructed in 1965 and renovated in 1990, the building is approximately 85% leased to a diverse mix of tenants that includes an entire floor of fully furnished executive suites.
The property sits on the eastern edge of Uptown, a neighborhood immediately north of downtown Oakland that has undergone significant redevelopment in recent years and is becoming known for its restaurants and lively nightlife. It fronts Snow Park and Lake Merritt, and features spectacular views of the Oakland hills. The Kaiser Center, a 28-story office landmark, is one block to the north.
Park Plaza Oakland L.P., the property’s owner, had been seeking to refinance a maturing permanent mortgage. The ownership entity is affiliated with Ted W. Dang and Commonwealth Real Estate, an Oakland-based real estate firm with property holdings throughout the San Francisco Bay Area.
On Park Plaza Oakland L.P.’s behalf, Highland negotiated and closed a seven-year, fixed-rate loan with two tranches that have different lending risk/return profiles. Both tranches carry the same interest rate, which was not disclosed, but the senior tranche is amortized over a longer timeframe than the junior tranche. The lender is Umpqua Bank, a community bank based in Roseburg, OR, with operations in the Pacific Northwest, northern California and northern Nevada.
“The creative structuring enabled our client to borrow at an attractive fixed rate and fully repay the previous mortgage without having to contribute additional equity, which a conventional loan would have required, given the state of the Oakland office market and today’s restrictive lending environment,” said Jeffrey K. Eliason, a principal with Highland who secured the financing for Park Plaza. “The two-tranche structure also provides some downside protection to the lender, which was able to stay within its underwriting parameters.”
Unlike typical fixed-rate mortgages, both tranches of the Park Plaza loan feature a declining prepayment schedule that will give the borrower some flexibility to refinance the loan at little or no cost toward the end of its term.
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