Our Portfolio

 

 

San Francisco Trophy Retail

Non-performing senior loan collateralized by a 35,000SF retail building.

 

 

Thos. P. Kaplan & Co., Inc.  

 

240 Post Street

Class A Retail

Union Square

San Francisco, CA

We partnered with a leading real estate private equity firm to acquire a $55,000,000 non-performing loan in December, 2010. The property owner had been renting the space on a month-to-month basis at a very low rent, while attempting to identify a high-end long-term tenant. We recognized the long term potential for the property due to its irreplaceable location and historical performance levels, notwithstanding the short-term cash flow shortfalls resulting from the month-to-month tenant.

We made an aggressive offer, which was quickly accepted by the seller.

We commenced foreclosure proceedings immediately upon acquisition of the note. We also commenced negotiations with a national high-end clothing retailer to place its West Coast flagship location at the property. On the day of the scheduled foreclosure sale, the borrower filed bankruptcy, stopping both the foreclosure and the tenant negotiations. During the pendency of the bankruptcy, the borrower widely marketed the portfolio for sale, while we aggressively pursued our remedies in court.

In the midst of a protracted bankruptcy battle, the borrower identified a credible buyer willing to pay over $90 million for the fee interest in the property. The sale price resulted in a full payoff of our loan at par plus accrued default interest, resulting in a 22% IRR over a two year hold. This transaction is representative of our strategy of seeking assets with long-term historical stability, which may have suffered a temporary impairment due to high leverage, and a loss of a major tenant.

 

 

 

The Southgate Apartments

Acquisition and repositioning of a 424 unit, 6 building apartment complex in Chicago, IL

 

Thos. P. Kaplan & Co., Inc.

The Southgate Apartments

425-unit Class B Apartment Complex
Mt. Greenwood
Chicago, IL

 

 

We partnered with a leading real estate private equity firm to acquire this $26,800,000 non-performing loan in May, 2010. Until mid-2009, the Southgate exhibited stable historical performance. Operating metrics declined dramatically after the borrower defaulted in 2009. A receiver was appointed in December 2009, and the receiver retained a nationally known property manager. We recognized the long term potential for the property to return to historical performance levels. We made an aggressive offer (based on in-place cashflow), which was quickly accepted by the seller. Under the new property manager, performance started to improve dramatically.

We have received offers for the property in the $28 million to $29 million range for an anticipated IRR in excess of 35%. This transaction is representative of our strategy of seeking assets with long-term historical stability, which may have suffered a temporary impairment due to high leverage, deferred maintenance or inattention.

 

 

 

Hotel Portfolio

Acquisition of B-Note and Mezzanine loan secured by hotels in San Francisco, San Diego and Orlando

 

Thos. P. Kaplan & Co., Inc.

Hilton Harbor Island

Full Service Airport Hotel

Harbor Island

San Diego, CA

Thos. P. Kaplan & Co., Inc.

Best Western
Lake Buena Vista

325 Unit Full Service Hotel
Downtown Disney

Orlando, FL

 

 

We partnered with a leading real estate private equity firm to acquire a non-performing B-note and mezzanine loan with a combined principal balance of $70,000,000 in June, 2011. The loans were secured by full service hotels in prime locations:

  • Fisherman’s Wharf, San Francisco;
  • San Diego Airport;
  • Disneyworld’s Lake Buena Vista.

Upon acquisition of the mezzanine loan, we negotiated a consensual deed-in-lieu from the borrower.  We assumed $90 million of existing cmbs debt which was past its scheduled maturity.  We negotiated a maturity extension and a rate reduction with the special servicer, providing time to stabilize the assets.

We are currently in negotiations with a potential purchaser of the largest of the three hotels.  Upon the sale of this hotel, we will have recovered our entire initial investment of approximately $45 million, and will retain the remaining two hotels with a cost basis of zero. 

 

 

 

Commercial Mortgage Portfolio

Underwriting, modeling and valuation of 270 assets in twenty states

 

Thos. P. Kaplan & Co., Inc.

$350 million Commercial Mortgage Pool

Acquisition of 270 classified commercial mortgage loans secured by multifamily, mobile home park, industrial, office and retail assets located in twenty states.
Various Locations

 

 

 A leading alternative asset manager with $150 billion in assets under management retained us in connection with its acquisition of a portfolio of classified commercial mortgage loans. 

We underwrote each asset in the portfolio, surveying local property brokers nationwide to determine market cap rates, per-square-foot and per-unit valuation metrics, current market lease terms and competing inventory in the local market.  Using these metrics, we estimated current revenues, operating expenses, NOI and property values for approximately 200 assets.  Using this data, we created a model to estimate probability of default; loss given default; and projected monthly cashflows to maturity for each asset. 

The client used our underwriting and our cashflow model  to generate price/yield calculations under a variety of scenarios, and to prepare summary- and detail-level reports for its internal investment committee.  The client ultimately purchased the portfolio. 

To date, the portfolio is outperforming our projections.  The portfolio is on track to earn a yield to maturity in excess of 12% on an unleveraged basis.

 

 

 

Woodland Park

Acquisition of 192 REO Condominium Units in a 240 Unit Fractured Condo Complex

 

Thos. P. Kaplan & Co., Inc.

Woodland Park

192 lender-owned units in a
240 unit condominium conversion
on the South Side of Chicago
Bronzeville


Chicago, IL

 

 

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Portchester Portfolio

Acquisition of Twenty 1-4 Family Homes with 60 Rental Apartments

 

Thos. P. Kaplan & Co., Inc.

Portchester Portfolio

Twenty 1-4 family rental homes
containing 60 dwelling units

Port Chester, NY

 

 

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