Clarion Pension Fund Gets $100M in Secured Credit, Backed by Seven Industrial Properties

Utilizing a 2.1 million-square-foot commercial portfolio owned by a pension fund it advises as collateral, Clarion Partners L.L.C. now has its hands on a $100 million secured credit facility.

Utilizing a 2.1 million-square-foot commercial portfolio owned by a pension fund it advises as collateral, Clarion Partners L.L.C. now has its hands on a $100 million secured credit facility.

The collection of assets backing the credit facility consists of seven properties in five states. An industrial property and an office property are located in the California cities of Fullerton and Sunnyvale, respectively, and an additional two office assets are sited in Boca Raton and Plantation, Fla. The group is completed by industrial facilities in Edwardsville, Ill., and Secaucus, N.J., and an office property in Scottsdale, Ariz.

Commercial real estate services firm Jones Lang LaSalle’s Capital Markets arranged the facility, locking in Principal Life Insurance Co. to provide the funds. The facility comes in the form of $50 million in permanent financing, as well as a $50 million future funding component for the financing of properties outside of the portfolio. “The initial fixed-rate financing is collateralized by seven properties, with the ability to expand the loan up to $100 million near term with additional assets,” Mike Melody, executive managing director and co-head of JLL’s real estate investment banking practice, said. “This deal allowed flexibility in terms of moving existing assets out of the loan, with the ability to bring new assets into the financing facility with no prepayment penalties.”

A handful of factors helped seal the deal with Prudential. The portfolio’s strong net operating income, its substantial list of high-quality tenants and diversification of product type proved attractive.

Insurers like Prudential have been at the forefront of lending activity of late. “Back at full capacity without as many residual problems, they have a ton of cash to dole out to best-breed borrowers who own class A properties, and land excellent opportunities to make decent loans near market bottom,” a 2012 trends report by the Urban Land Institute and PwC noted.