Mesa West Capital looked at the Hyatt Regency San Francisco’s impressive performance, its increasingly strong market and its solid ownership and decided to put its money where its mouth is. The portfolio lender has provided a partnership involving affiliates of Dune Real Estate Partners L.P. and DiNapoli Capital Partners L.L.C. with a $130 million first-mortgage loan for the refinancing of the 802-room hotel in downtown San Francisco.

“In the context of the hotel world, definitely lenders are warming up to the San Francisco hotel market because it’s arguably, outside of New York, the strongest hotel market in the United States,” Thomas E. Callahan, co-president & CEO-West, with PKF Consulting USA, told Commercial Property Executive.

Dune and DiNapoli snapped up the Hyatt Regency San Francisco from a subsidiary of Strategic Hotel Capital L.L.C. in 2007, after which point the team initiated a major renovation program at the 19-story property. Built in 1973 along the waterfront at 5 Embarcadero Center, the lodging destination sits in the bustling Financial District and features 67,000 square feet of function space, as well as a fitness center, restaurant and lounge.

As Ronnie Gul, principal with Mesa West, noted in a press release on the refinancing deal, the Hyatt Regency San Francisco is “outperforming the market in both rate and occupancy.” It’s an impressive achievement given the enviable strength of the city’s hotel market. The lending community may not be as keen on the hospitality sector as it is on multi-family, however, there are always exceptions and San Francisco’s hotel market is one of them.

“Room rates and RevPAR are extremely high,” Callahan said. “Most hotels’ occupancies are in excess of 80 percent, room rates of most hotels increased 14 to 15 percent in 2011 over 2010, and most people are forecasting room rates to increase at 8 to 10 percent this year.”

Furthermore, he added, there is no new construction on the horizon in San Francisco, as opposed to New York, where a fair number of new rooms are scheduled to come online.

The San Francisco hotel market’s positive fundamentals and strength are the keys to opening the door to financing in the current environment. “The truth is, of course, most lenders aren’t really excited about hotels per se, but if you are a lender looking to lend money on hotels, San Francisco is perceived as one of the best markets you can be in.”

Lenders are keen on the multi-family market, and the focus isn’t just on Class A communities. Acting on behalf of Santa Ana, Calif.’s Focus Development, Johnson Capital just closed a $75 million debt and equity financing deal for one of its clients, a Southern California-based full-service real estate investment and development firm, facilitating the acquisition of a 1,271-unit portfolio of Class B-minus and Class C apartment communities in Florida and Texas.

Johnson Capital orchestrated a strategic partnership with a private, low-profile equity source for the purchase of the nine apartment properties, and placed $48.6 million of Fannie Mae financing with Centerline Capital. Johnson Capital had its reasons for going with Fannie Mae as opposed to Freddie Mac. “With the Fannie Mae process, you get better pricing across the board,” Neil Bane, principal and head of the equity division at Johnson Capital, told Commercial Property Executive. “Our client gets better pricing and the lenders are able to achieve better pricing, and they sell it to the street because of the volume of the portfolio.”

And a bevy of equity providers took an interest. “The borrower has good experience in terms of renovation, redevelopment and repositioning, so there was some good upside,” he said. “And the fact that the properties were in relatively good markets that appear to have good upside and the client is buying at a pretty good cap rate — an 8.5 to 9 percent cap rate — gave those Fannie Mae lenders, who would otherwise not feel comfortable, the comfort to do the deal.”

The fixed- and floating-rate debt came in the form of loans totaling $35.8 million for five properties in Tampa and two in Orlando, and $12.8 million of bridge financing for the remaining two properties, located in Pasadena, Tex.

“It’s often hard to get floating rate programs on B and C properties, I think we did a good job of being able to identify a number of lenders who were willing to do that here,” Bane said.

Fully leased premier office properties continue to be at the top of buyers’ list and Wells Core Income REIT has just added one such asset to its portfolio. The REIT recently acquired Franklin Center, a 200,600-square-foot office building in the Baltimore submarket of Columbia, Md., from Principal Real Estate Investors.

In addition to being occupied in its entirety by a creditworthy tenant, scientific and technology applications company SAIC, Franklin Center is also new — and green. The seven-story building made its debut in 2008, and it has earned LEED Gold certification by the U.S. Green Building Council.

The length of SAIC’s lease is unclear; however, Wells Core REIT should not have too much of a challenge maintaining a full tenant roster at Franklin Center should SAIC depart. The property, located near Fort Meade and the U.S. Department of Defense’s U.S. Cyber Command, sits in an area where the prospect for long-term demand for office space is on the rise. It has everything to do with jobs.

“Driven by numerous expanding industries, the Greater Baltimore area is ahead of the curve when it comes to market stabilization,” a report by commercial real estate services firm Cassidy Turley noted. “Market conditions should start to show signs of improvement with the influx of more than 15,000 jobs due to the DoD’s Base Realignment and Closure of 2005. The National Security Agency’s increased hiring efforts to support its cyber security initiatives should also have a positive economic impact on the area.”

It’s seen a flurry of activity in just a few months of its existence. Yesterday, Griffin-American Healthcare REIT II picked up $166.5 million worth of commercial real estate from the partnership of Westport Capital Partners and Reichmann International Development Co. in the form of ten skilled-nursing facilities across the Southwest.

Affiliates of Westport will continue to operate the facilities, and entered into a master lease with an initial term of 15 years with Griffin-American after the deal was struck. The portfolio features 1,364 beds in the ten facilities.

Just two weeks ago, Griffin-American spent $174 million on 11 facilities – ten skilled-nursing centers and one medical-office building – that totaled approximately 454,000 square feet. “Demand for healthcare services will only increase in the future,” Griffin-American CEO & president Danny Prosky told Commercial Property Executive. “As Baby Boomers continue to turn 65 over the next 18 years, and along with the general aging of the population, we’re bullish on growth and demand for the sector.”

In early December, amid its spinoff from former owner Grubb & Ellis Co., the healthcare REIT purchased an eight-property medical-office portfolio for $112 million. After that transaction, Prosky mentioned that, under his leadership, Griffin-American would be “aggressively acquiring quality, income-generating healthcare properties throughout the country and expects to own a portfolio of 73 buildings valued at nearly $710 million … in the next few months.”

Westport saw the sale as a win for its balance sheet. Russel Bernard, managing principal with the firm, noted that Westport grew the company’s operating income by a double-digit compounded growth rate for the first time since 2007. “The team was able to achieve this performance by repositioning the assts, driving improved occupancy and concentrating on census mix,” he said. “We are very pleased with the outcome of this transaction.”

Westport and RIDC have held a majority interest in the Westport portfolio since 2007.

The 133-unit Montoya Apartments in Branford, Ct.

Walker & Dunlop L.L.C. has come through for Principal Management Partners with a $163.8 million loan package for the refinancing of a four-property apartment portfolio in Connecticut. The group of assets encompasses a total of 1,170 residential units.

Two of the properties, the 349-unit Hoyt Bedford Apartments and the 238-unit Morgan Manor Apartments, are located in Stamford, while the 450-unit Seramonte Apartments and the 133-unit Montoya Apartments are sited in Hamden and Branford, respectively.

Four properties, four loans. Walker & Dunlop provided the financing under Freddie Mac’s Capital Markets Execution Program. The loans, at loan-to-value ratios ranging from 79.2 percent to 80 percent, were structured with a seven-year term with two-years interest only and a 30-year amortization.

The private lending community certainly made its presence known as a viable option for certain borrowers in the thriving multifamily market last year, but Freddie Mac and Fannie Mae remain strong go-to sources. “Banks continue to lend but generally speaking only on shorter duration loans with floating interest rates,” Willy Walker, president and CEO of Walker & Dunlop, noted during the company’s fourth-quarter earnings conference call in November. “I expect that, during the remainder of 2011 and into the first part of 2012, we are going to see a continuation of the current competitive landscape, where the agencies are lending, banks are trying to understand the regulatory landscape and deploy short-term floating rate debt, life insurance companies continue to actively lend, and CMBS exists but not as a major market force.”

Walker & Dunlop, a Fannie Mae DUS, Freddie Mac Program Plus and MAP- and LEAN-approved FHA lender, closed 2011 with a loan origination volume of $4 billion, $2.7 billion of which was through the two government-sponsored enterprises. Walker added of the current lending climate, “This landscape allows Walker & Dunlop to do what we do best, grow our agency lending business with limited pricing pressure from other sources of capital and expand our business into new areas of lending as a publicly traded non-bank finance company.”

The new Republic at Lubbock housing community.

Aided by $52 million of financing placed by Holliday Fenoglio Fowler L.P., The Scion Group and Arch Street Capital Advisors have snapped up two student housing properties in Texas. The Retreat at Denton and The Retreat at Lubbock, renamed The Republic at Denton and The Republic at Lubbock following the acquisition, offer an aggregate 1,345 beds near the University of North Texas in Denton, and Texas Tech University in Lubbock, respectively.

Scion and Arch Street purchased the off-campus apartment communities from a joint venture between the developer and an institutional real estate private equity fund.

The financing came in the form of two five-year, fixed-rate, interest-only loans, one for $18.2 million and another in the amount of $34 million, placed through Freddie Mac’s CME Program. As a sub-sector of the thriving apartment sector, student housing is an appealing risk to the lending community and the high-quality assets that Scion and Arch Street recently acquired have particularly desirable features.

Age is more than just a number, it is a coveted characteristic in commercial real estate financing and The Republican at Denton and the Republican at Lubbock are brand new, both having opened their doors in 2011. High occupancy rates are also a draw and in that category, the assets get high marks with respective occupancy levels of 97 percent and 98 percent. Additionally, student housing in general has a bright future. Population growth and a boom in the college-age population — Generation Y, or the babies of the Baby Boomers — continue to push up enrollment.

With strong fundamentals in place, student housing is hot and getting hotter and the lending community’s fondness for the sub-sector is pushing up the already high transaction volume even higher. “Given the current lower cap rate environment, the high demand by owners/developers to monetize and the high demand by investors to deploy equity, 2012 should see a substantial increase in activity for both total transactions and total dollar volume,” a report by the ARA National Student Housing Group noted.

HFF has certainly been active in the financing of student housing trades these days. Just one week ago, the commercial real estate and capital markets services provider announced that it had secured a $56 million loan for the refinancing for AIG Global Real Estate Investment Corp.’s 260-unit Sterling Collwood student housing community near San Diego State University in California.

“Debt” is going to be the name of the game for the European real estate markets in 2012, according to Emerging Trends in Real Estate Europe 2012, the industry forecast published by PwC and the Urban Land Institute. With daily reminders that interest-rate cuts on Greek bonds are still in limbo and debt-rating decreases for Euro-zone nations are on the rise, a turnaround looks to be tied directly to banks’ willingness to make commercial loans and whether the financial industry could face another collapse. The survey took responses from more than 600 commercial-property professionals across Europe to determine the overall course of the industry.

“The profound instability is affecting the providers of equity and debt,” Joe Montgomery, chief executive of ULI Europe, said. “We are operating in an environment that is very difficult to model. The uncertainty over the level of banks’ exposure to sovereign-debt default, coupled with uncertainty over the regulatory changes introduced as a result, has caused significant elements of the capital markets to be reduced to a state of near paralysis.”

In general, lenders are facing a level of pessimism over debt at levels not seen in years, according to John Forbes, the report’s author. Only 6 percent of lenders think that debt will be as available this year as it was in 2011, and a full 52 percent feel it will be substantially less available.

But not all news is gloomy, however. “The good news is that the view of respondents regarding the availability of equity is much more positive,” Forbes wrote. “Most promising is the response from institutional investors: 65 percent believe that equity will be moderately more available, with a further 10 percent believing that equity would be substantially more available.” And those lenders will play a significant role in the economy’s health, as all the players are interconnected. Mezzanine lenders need senior lenders to push debt into the marketplace, and insurance companies need time to build the right infrastructure to deploy capital.

With such uncertainty, it was difficult for the survey’s respondents to make sweeping generalizations about market sectors, but geography will certainly play a role in how investments will roll out from city to city. Istanbul, the report noted, has been the top market for commercial real estate investment for the past two years, “but that ranking is more a reflection of its long-term economic future than a sign that investors are about to rush to place their capital in the market.” And, while debt concerns continue to plague Spain and Italy, opportunistic investors may still see possibilities as banks begin to release assets later this year.

Overall, 2012 could be a turning point, the year that investors have been waiting for – or it may turn out to be a bust. Pressures from all directions could make finding funding solutions for banks an imperative, but whether investors get the bargains they would like is still very much an unknown. In general, the report’s bearish mood reflects the larger overall picture, and the coming months will certainly tell a clearer story.

The apartments a 2222 Smith St. in Houston.

The Morgan Group, a company focused on development, construction and property management of luxury multi-family properties, has arranged financing of $146 million on behalf of its affiliated investment partnerships. The proceeds were obtained from bank, agency and insurance company loans with terms ranging from five to ten years, collateralized by five apartment properties in Texas, Florida and North Carolina.

“Current loan rates for multifamily projects were extremely attractive,” Mike Morgan, the firm’s chairman & CEO, said. “It appeared to be a good time to lock in terms for stable, core assets. The five apartment properties we refinanced represent more than 1,700 units in our portfolio.”

These properties include: 2222 Smith Apartments and 33Thirty-Three Weslayan Apartments in Houston, financed by BBVA Compass Bank and Northwestern Mutual Life; The Village at Lake Lily in Maitland, Florida, and Arelia James Island Apartments, in Jacksonville, Florida, which were financed by FNMA and Metropolitan Life; and Spectrum South End Apartments in Charlotte, North Carolina, financed by New York Life.

Finding financing for apartment properties is unlikely to prove difficult in the coming year, as the sector just came off an extremely positive 2011. “The multi-family sector continued its marathon-like recovery in 2011, and has entered full expansion mode in virtually every market,” Hessam Nadji, managing director, of research and advisory services for Marcus & Millichap Real Estate Services Inc., said. “Favorable demographics, the release of pent-up demand as young adults debundle from family and roommates, and increased renter demand due to changing attitudes towards homeownership — which has become increasingly difficult in this country — drove more people into renting. Although the private sector created 1.8 million jobs last year, even greater job creation will be needed to sustain the white-hot levels absorption recorded after the recession.”

Lenders continue to look favorably upon the multi-family market, and student housing is no exception. Acting on behalf of AIG Global Real Estate Investment Corp., real estate and capital markets services firm Holliday Fenoglio Fowler L.P. has obtained a $56 million loan for Sterling Collwood, a premier student-housing property near San Diego State University in San Diego.

Collwood sits on seven acres approximately one mile from the SDSU campus. The apartment community opened its doors in 2010, featuring 260 units in three buildings. M&T (FNMA) provided AIG with a seven-year loan carrying a 4.57 percent fixed-rate for the refinancing of a construction loan on the property.

The glory days of loans being handed out like candy are just a distant memory. Extreme caution is the key characteristic of the capital markets right now. However, the multi-family sector was the first to bring lenders off of the sidelines and it continues to be a favorite for financing. But while it’s not just any asset that can lock in a good loan, Sterling Collwood makes the grade.

It’s new, it’s 99 percent leased and the prospects for maintaining high occupancy for the near future get an A-plus.  ”Demand for off campus housing is about 15,000 units more than what the local area is currently providing, thus positioning Sterling Collwood for long-term success,” Zachary Koucos, associate director with HFF, said. And the property’s holding of a coveted designation is unlikely to hurt; Sterling Collwood is the first asset in San Diego to be certified LEED-Gold by the U.S. Green Building Council.

Nationally, the student housing sub-sector of multi-family remains strong, having held a position near the top of the class throughout the economic downturn. Demographics, like the continued upswing in enrollment, are good. “Generation Y, the progeny of the enormous Baby Boom cohort continues to swell the ranks of Americans aged 18 to 24 years, the sweet spot for full-time college enrollment,” according to a recent report by Red Capital Group, a multi-family debt and equity provider.