Lender Behind Refi Of Plano Hotel Has Sights Set On DFW
A Miami-based originator, servicer and manager of long- and short-term fixed-rate commercial real estate loans is hungry for CRE opportunities in Texas.
The lender, 3650 REIT, opened an office in DFW in April to grow its Texas footprint, and in July closed a big local hotel refinancing.
“We do first mortgage refinances that are conservative loan-to-value, but we also have what we call a bridge-event-driven lending strategy where we will do anything from a liquidity event or a large gap in cash flow to a ground-up development construction loan,” 3650 REIT co-founder and Managing Partner Toby Cobb said.
The firm originated more than $130M in 10-year, first-mortgage loans in July to refinance high-quality hotel properties across the U.S., including a first-mortgage refinanced loan for the Renaissance Dallas at Plano Legacy West Hotel.
The asset, developed by Sam and Daniel Moon, is only two years old and considered high-quality from an underwriting perspective. 3650 REIT originated a $90M loan to refinance the Plano hotel’s first mortgage.
In addition, the company originated a $20.5M loan to refi a Courtyard by Marriott property in Lake George, New York, and issued another $20M for a Hilton Garden Inn in Charlotte, North Carolina, last month.
“These loans reflect the substantial progress we have made throughout 2019; not only have we facilitated a healthy pipeline of opportunities, but at the end of the second quarter, our 2019 originations have already surpassed the $600M milestone,” Cobb said in a statement. “By focusing on the perspective of high-quality sponsors, we have proven that our differentiated business model is aligned with the needs of the borrower community.”
While the hotel asset class tends to spook capital in general, 3650 REIT originates loans conservatively and, leaning on its experience in hotel development through its affiliate development arm, is comfortable taking some bets on the sector.
“We focus on specific assets in specific markets, and we don’t have a ‘we are making loans in hospitality’ mantra,” Cobb said. “We have a fundamental belief that we should only make loans where we believe that we have very solid information and where we have a borrower that is extremely capable and understands the market.”
DFW surfaced as an attractive ground for activity in commercial real estate when Cobb evaluated the market’s access to major corporations, its job growth, its low-tax structure and its growing economic base.
“We think Texas is an important market for us and for commercial real estate lending in general, so our expansion in Dallas is an important step,” Cobb said. “We are going to restrict our ownership and development [activities] to our local markets in Miami, but we are a national lender and we lend across the capital structure.”
3650 REIT’s Renaissance Dallas at Plano Legacy West origination is an example of the type of asset and sponsor the REIT prefers when searching for opportunities.
“In the Plano asset, in particular, we do have a ton of forward [hotel] bookings,” Cobb said. “We could have forward-bookings sometimes two years in advance from big corporate users. You have a better understanding of the cash flow and that makes the underwriting easier.”
The Plano hotel also enjoys a location surrounded by corporate headquarters and large firms, including Toyota Motor North America, Liberty Mutual Insurance, J.P. Morgan Chase & Co. and NTT Data.
CORRECTION, AUG. 1, 5:30 P.M. CST: A previous version of this story incorrectly stated the month in which 3650 REIT officially opened in Dallas. The story has been updated.
