August 2016 was a rather busy month in mezzanine financing world. Lots of transactions were announced both in the mid-market corporate setting and real estate arena.
There were also far more transactions in North America than in any other region.
High level of activity in real estate mezzanine financing is also another reminder why we see so much interest in real estate mezzanine funds. September 14th we are launching the list of real estate mezzanine funds on GMF website.
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USA and Canada:
- Cyprium Partners, a non-control private equity firm announced its new sponsorless mezzanine investment and commitment in Bensussen Deutsch & Associates. This investment was the eleventh transaction from the firm’s Cyprium Investors IV fund, which closed in December 2014.
- Northstar Capital provided mezzanine debt financing and co-invested equity in a transaction where May River Capital acquired and recapitalized Green Bay, Wisconsin-based MECA & Technology Machine Inc, a maker of tight tolerance machined components for the packaging, flexographic printing and web converting sectors. No financial terms were disclosed for the transaction.
- Monroe Capital LLC today announced an increase in the credit facility to Cal Net Technology Group (“Cal Net”) to support the acquisition of inhouseIT, Inc. (“inhouseIT”). Cal Net is a portfolio company of Boathouse Capital and Olympic Valley Capital. Cal Net is the premier provider of managed IT services, cloud, security services and Unified Communications in the Southern California region.
- Antares Holdings and Crescent Mezzanine have provided debt financing to Partners Group, the global private markets investment manager, to acquire global IT support services provider Systems Maintenance Services (“SMS”) on behalf of its clients. SMS is being sold by funds affiliated with Thomas H. Lee Partners, L.P. (“THL”) and Summit Partners (“Summit”).
- Chronos Solutinos has acquired UPF Services. Financial terms weren’t announced. Spokane Valley, Washington-based UPF provides services and technology solutions for the real estate and mortgage industries. Sellers include UPF, Lynwood Capital Partners, GMB Mezzanine Capital LP and First Capital Partners LLC.
- Yukon provides mezzanine financing to Axiom Materials, California-based manufacturer of proprietary advanced composite materials and related products for customers in the aerospace & defense, industrial, automotive, medical device, and electronics industries. Yukon partnered with Sorenson Capital in its investment in Axiom.
- Revelstoke Capital Partners completed its investment in Brentwood, Tenn.-based Fast Pace Urgent Care, backed by Shore Capital Partners. Yukon Partners provided mezzanine capital in the deal.
- F.N.B. Capital Partners, a Pittsburgh’s only small business investment company fund, marked the first exit of a portfolio company, more than doubling its initial investment. FNBCP invested $7.5 million in Hazelton, Pa.-based DBi Services as part of a $35 million mezzanine syndication in March 2014. Now Chicago-based private equity firm Sterling Partners has invested in DBi, a provider of transportation infrastructure services. Since about 75 percent of its fund has been invested, FNBCP wants to raise a second one.
- Lawrence Financial closes 20 deals with total funding in excess of $75 million in first half of 2016. Lawrence specializes in providing asset based financing as well as subordinated debt.
- Canadian working capital fintech Lendified has secured a total of $24 million in financing from two sources. Liquid Capital will provide the senior debt for a new credit facility of up to $20 million for working capital loans Lendified will underwrite. A private placement provided an additional $4 million in mezzanine financing.
- Triangle Capital Corporation, a leading provider of capital to lower middle market companies, announced that it closed a $24.5 million investment in Smile Brands Group (“Smile Brands”) consisting of subordinated debt and equity. Smile Brands is a dental service organization operating clinics in 17 states.
- Enlightenment Capital said Aug. 17 that it has sold its portfolio company, Vistronix Intelligence & Technology Solutions, to ASRC Federal. Financial terms weren’t announced. Reston, Virginia-based Vistronix provides national security systems, solutions, and services to the Intelligence Community, Department of Defense, and Federal Civilian agencies.
- Beechbrook Capital has announced a first close for its third private debt vehicle at around €100m. Private Debt Fund III will provide debt packages of between €5-15m to private-equity-backed companies with turnovers of €10-100m. It will make mezzanine, junior mezzanine, unitranche and small allocation investments, primarily supporting buyouts, acquisitions, shareholder re-alignments and growth strategies.
- Capitala Finance Corp. exits four investments during August and receives repayments of subordinated and senior loans, as well as realizes gain on equity interests. Also in connection with the exits it reduces its exposure to energy industry.
- Patriot Capital provided mezzanine financing to transaction where Guardian Capital Partners acquired Carson-Dellosa Publishing. Carson-Dellosa is a leading provider of K-8 supplemental education content for parents, teachers and students with an established portfolio of market-leading brands including Spectrum, Summer Bridge, Carson-Dellosa Education and others.
- Five Points Capital, through BB&T Capital Partners Mezzanine Fund II, LP, invests subordinated debt and equity in support of the acquisition of Vektek by LFM Capital.
- Capital@rent provides mezzanine finance in support of b+pharma shareholder buy out. b+pharma is a Belgian company that specializes in the development, production and distribution of nutriceuticals.
- The Scottish Loan Fund (SLF) and Maven Capital Partners have exited a supplier to the education sector, Spaceright Europe. The SLF provides mezzanine loan funding to small- and medium-sized enterprises (SMEs) across Scotland that are looking for growth capital to help drive their expansion plans. Over the period of Maven and SLF involvement, the business has almost doubled both turnover and headcount. Maven is the fund manager for the SLF.
- Finance Birmingham’s £56 million Mezzanine Fund and Royal Bank of Scotland’s corporate transactions team in Birmingham provide financing to MBO transaction. Chairman of Lean Education and Development hands over the reins to senior management team eight years after founding the company.
Real estate mezzanine:
USA and Canada:
- Multi-Housing News interviews Jamie Henderson of Cornerstone Real Estate Advisers
- Meritz Real Estate Asset Management has committed some 150 billion won (US$135 million) to investing in an upscale office building in Los Angeles by raising funds from other Korean institutional investors, local newspaper reported on Aug. 2.
- Meridian Capital Group, a debt broker based in New York, has arranged $135.5 million in loans for Continuum Healthcare to refinance a six-property portfolio of skilled nursing homes in New Jersey and Pennsylvania.
- Walker & Dunlop Commercial Property Funding, a direct lending platform by Maryland-based Walker & Dunlop Inc. (NYSE: WD), structured and closed the $10 million mezzanine loan for the hotel room expansion.
- iStar provides mezzanine loan that will support Domain Cos. in developing a high-end condominium project in the South Market neighborhood of downtown New Orleans.
- Investors are buying more student housing properties than ever before. “Last year was the biggest year ever, investment sales-wise,” says Fred Pierce, president and CEO of Pierce Educational Properties. And a variety of financing sources are eager to provide permanent loans, equity and mezzanine financing.
- Mesirow plans to continue to acquire single-tenant properties nationwide, supported by its mezzanine and senior debt placement platforms, Mesirow CEO and chairman Richard Price says. In the last 18 months, Mesirow has monetized $1B and 2.5M SF of real estate for Verizon across two transactions.
- In Commercial Observer’s Q&A with Robert Altman and Brian Warwick, principals and founders of Altman Warwick, they indicate that new mezzanine lenders offer rates between 7 and 12 percent. It is, however, hard to find small mezzanine, less than $10 million, but there are a lot of players in the over $10 million space.
- Canadian Campar Capital Corporation to acquire 80% interest in San Antonio apartment complex. The total purchase price of approximately US$35,550,000 will be satisfied from the proceeds of a first mortgage loan obtained from a third party lender in the principal amount of US$23,237,500 at an interest rate expected to be 2.24% per annum and a mezzanine loan obtained from another third party lender in the principal amount of US$7,000,000 at an interest rate of 9.25% per annum, with the remainder of the purchase price to be paid in cash.
- NorthStar Realty Finance provided $16.5 million mezzanine loan to hotelier Sam Chang to acquire two Club Quarters hotels for $155 million.
- Deutsche Bank and SL Green Realty provided an $80 million to Aion to refinance 11 East 44th Street and buy Clarion’s ownership stake in the building, the Commercial Observer reported. The financing, which consists of a $65 million senior mortgage from Deutsche and a $15 million mezzanine loan from SL Green, replaces an earlier $38.5 million loan.
- Ready Capital Structured Finance, a nationwide commercial real estate bridge and mezzanine lender, announces the closing of multifamily and mixed-use (multifamily and retail) loans in New York and Arizona, for approximate funding totaling over $16.45 million.
- Qualitas will partially fund developer BPM’s most ambitious project to date, the $300 million Shadow Play tower at Melbourne’s Southbank. The real estate investment management group said it would provide $33.5m in mezzanine funding to BPM, which said it had pre-sold 90 per cent of the 486 units available in the 46-level tower.
- Chifley Securities has announced that it achieved record levels of lending for the 2015-2016 financial year, amounting to $638 million to a range of investors, builders and property developers across Australia.
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