Mesa West completes first transactions on special situation lending platform

Mesa West Capital has completed the first transactions in its new special situation lending platform. The new lending platform is the next evolution in the company’s lending capabilities, providing rescue capital, mezzanine, and preferred stock up to $ 100 million.

In the platform’s early deals, Mesa West funded $ 47 million in two deals located in Chicago and San Diego. As part of the Chicago Accord, LaSalle Investment Management secured a $ 37 million mezzanine loan to refinance and stabilize a 30-story, 549,000 square foot Class A office building in Chicago’s West Loop. La Salle acquired the property in 2017 and completed a multi-million dollar renovation and increased the occupancy rate to 69%.

In San Diego, the company provided a $ 10 million mezzanine loan to a joint venture between Montana Avenue Capital Partners and Arsenale SGR for the sale / lease of a flexible portfolio of four buildings in San Diego. The seller / lessee of the transaction was Millennium Health. The San Diego and Chicago agreements included first mortgage loans from Wells Fargo Bank. Keith Largay of JLL in Chicago arranged the financing on behalf of LaSalle Investment Management, and Aldon Cole of JLL’s San Diego office arranged the financing for the sale / leaseback of Millennium Health.

While the Special Situations Platform is an evolution and expansion for Mesa West, it does not change the core business strategy. “We continue to focus on financing high-quality real estate, with strong sponsors and in markets with long-term sustainable fundamentals,” said Ronnie Gul, director of Mesa West Capital, in a statement regarding the new platform. loan. “This program is a natural extension of our existing business and allows us to provide effective solutions to our clients as they operate in a difficult economic environment.”

The lending platform is an example of the growing attention to distressed assets during the pandemic. In addition to new loan programs like this, many investors have also started partnerships to take advantage of troubled transactions. Earlier this year, Lionheart Strategic Management and Schroders Investment Management North America announced a new loan acquisition agreement target $ 250 million in transitional and troubled mortgage loan investments. CoStar predicts a large number of struggling sales to reach by mid-2021 and assumes that they will exceed the number of such deals in the latest economic downturn. CoStar’s models predict a range of between $ 96 billion and $ 370 billion.

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Mesa West grants $ 37 million Mezz loan in LaSalle office tower in Chicago Refi – Commercial Observer

Alternative lender based in Los Angeles Mesa West Capital provided $ 37 million in mezzanine debt as part of a $ 153 million program that refinanced LaSalle Investment Managementthe 30-story office tower in 123 North Wacker Drive in Chicago at the end of February, according to information from Mesa West. Wells fargo provided about $ 115 million in senior debt in the transaction, sources told Commercial Observer.

The five-year, variable-rate mezzanine loan was one of two new deals to roll out of Mesa’s new special-situation lending compartment, according to the company. The other was a $ 10 million loan made to a joint venture between Montana Avenue Capital Partners and investor in creative office Arsenal SGR on the sale-leaseback of Millennial healththe old San Diego four-building corporate headquarters campus; Wells Fargo also provided an initial mortgage loan as part of this transaction.

Executive Director of Mesa West Matt Snyder led the creative team on 123 North Wacker Drive, while JLLof Keith Largay arranged funding on it; both worked in the outposts of their company in Chicago.

The bread and butter of Mesa West throughout its 17-year existence have been bridging loans, but its new Special Situations platform provides mezzanine loans, bailout financing, and preferred stock investments up to ‘to $ 100 million, across a variety of asset classes, the company said. It is a move that many companies are preparing to make in order to take advantage of the opportunities that have arisen in the wake of the coronavirus pandemic.

“We continue to focus on financing high quality real estate, with strong sponsors and in markets with long-term, sustainable fundamentals,” said Mesa West Principal. Ronnie gul. “This program is a natural extension of our existing business and allows us to provide effective solutions to our clients as they operate in a difficult economic environment.”

The $ 37 million loan to LaSalle paid off nearly $ 137 million in past debts the company had incurred New York Life Insurance Company to buy Wells Fargo’s 550,000-square-foot trophy property in 2017 for $ 146.5 million. Wells ended up with the asset after a foreclosure in 2016.

The asset is in the Loop neighborhood of downtown Chicago and a few blocks west of the shores of Lake Michigan. Although it has not undergone any major renovations since its construction in 1986, LaSalle decided to deploy $ 33 million as part of a two-year capital improvement plan to modernize the asset, which saw its occupancy rate climb to 69% from 53% previously. the pandemic has confined almost everyone to their homes.

“It took a Black Swan event to stop LaSalle’s positive rental momentum at 123 Wacker,” Snyder said. “Enjoying an A + riverside location, this newly renovated and well-appointed building has proven to be competitive against more expensive new builds and will do well if the market recovers.”

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This Week in History: March 22-28

25 years ago: FBI confronting ultra-right-wingers in Montana

Jordan, Montana in 2009. Credit: Meridas (Vladimír Socha), Wikimedia Commons

On March 25, 1996, the leaders of the fascist Montana Freemen group were arrested by the Federal Bureau of Investigation. An impasse ensued between the FBI and the group of supporters of the heavily armed far-right organization.

The event demonstrated the extreme sensitivity of politicians in big business and the federal government to pressure from neo-fascist elements. The stalemate came following public hearings on the 1993 Waco massacre and the 1992 shooting with white separatist Randy Weaver, where Republicans in Congress openly sided with the far right.

In this case, the FBI has adopted a low-key, non-confrontational policy. The Justice Department only intervened after repeated requests for federal assistance from Garfield County Sheriff Charles Phipps, whose two-man department had received death threats from the Freemen for two years. LeRoy Schweitzer, the group’s leader, had been indicted four years earlier on charges of tax and fraud, but federal authorities took no action until 1996.

The media monopolies gave the cover of the deadlock normally reserved for major political events, inflating the importance of the episode and giving legitimacy to the far-right group. It lacked any consideration of the historical significance of the emergence of groups like the free men, nor any serious consideration of their political views and influence. They have been described as tax protesters or participants in mail-order fraud schemes, but not as racists, white supremacists, anti-Semites or neo-Nazis.

Free men were part of a larger far-right trend called “constitutionalists,” whose ideology was a mixture of religious fundamentalism and Nazi-style racial theories. They believed in a different citizenship status along racial lines, with white Christian men receiving their rights from God through the preamble and the First Ten Amendments to the Constitution. Under this ideology, everyone else derives their rights from the 14th Amendment, to be revoked by “organic citizens” as they see fit.

They appealed primarily to farmers ruined by the agricultural depression of the 1980s, offering a series of legally worded but bogus measures to defend farmers against foreclosure and eviction, revolving around claims that the departure of the United States of the gold standard made all of them denominated in dollars. invalid bank debts.

Free Men, the Montana Militia, and similar groups have made significant inroads into the Montana Republican Party. Republican state lawmakers have introduced militia-sponsored bills to ban the presence of UN forces on Montana soil, to urge all residents to arm themselves for militia service and to d ‘Require federal agents to give 24-hour written notice to local sheriffs before taking state action.

50 years ago: Washington post releases details of FBI COINTELPRO espionage

Letter from COINTELPRO plotting to publicize the pregnancy of actress Jean Seberg, who donated money to the Black Panther Party, and thus ruin her career

On March 24, 1971, the Washington post published a front-page article publicizing for the first time the vast network of illegal FBI surveillance and infiltration activities against US citizens as part of the covert Operation COINTELPRO (Counterintelligence Program) . The FBI spy operation spied on, infiltrated and conspired to publicly discredit a wide range of individuals and organizations associated with the civil rights movement, opposition to the Vietnam War and socialism.

the To post learned of COINTELPRO’s existence after anonymously receiving files that had been stolen from an FBI office in Media, Pa on March 8, 1971. The files were accompanied by a letter explaining that the documents had been acquired by a group Calling itself the Citizens Commission to Investigate the FBI.

The group sent the FBI files to several newspapers and demanded that the information be released so that the public could learn about illegal government activities. Most of the major newspapers initially refused to print the story. However, after the Washington post broke the news, it grabbed the world’s attention and the next day made headlines around the world.

COINTELPRO’s activities have gone far beyond simply collecting information and writing reports on the activities of left-wing groups. As part of the operation, starting in 1956, the FBI plotted to infiltrate and destroy organizations and movements considered to be “subverting” the national interest. Among those targeted by the counterintelligence operations were virtually all socialist leanings, the civil rights movement and its leader, Martin Luther King, Jr., the Black Panther Party, the American Indian Movement, and liberation groups. women and individuals as diverse as black nationalist Malcolm X, boxing champion Muhammed Ali and actress Jean Seberg.

A central element of the FBI’s strategy was to send agents to the targeted organizations and encourage internal conflicts that would cause splits. One of the government’s main methods was to promote violence or illegal activity which could then be used to justify arrests and violent attacks by the police. Many groups like the Black Panthers and the Socialist Workers Party found themselves overrun with agents. The Black Panthers have faced a savage crackdown through COINTELPRO. Many members were assassinated as a result of its operations, including Fred Hampton, leader of the Chicago Black Panther Party.

In April 1971, in reaction to overwhelming public opposition to espionage operations, COINTELPRO was officially fired by the FBI. However, espionage and infiltration activities continued under other program names.

75 Years Ago: The Bandung “Sea of ​​Fire” Incident in the Midst of the Indonesian Revolution

75 Years Ago: The Bandung “Sea of ​​Fire” Incident in the Midst of the Indonesian Revolution

On March 24, 1946, Indonesian troops fighting for independence oversaw the mass evacuation of Bandung, one of the country’s largest cities, and deliberately burned down much of its southern part in an act of defiance against the British authorities seeking to restore colonial rule. The incident, which sparked a massive fire, has come to be known as the “sea of ​​fire”.

In August 1945, Indonesian national leaders issued a proclamation of independence after the defeat of Japan in World War II, which had occupied the archipelago for three years. The British, along with the Dutch, the former colonial power, quickly intervened.

British troops arrived in Bandung at the end of September. In October, Indonesian independence militias, along with workers and peasants, launched attacks on the remaining Japanese troops, disarming them and seizing their property. At the end of November, British forces, who had taken over much of the city, were likewise besieged. The attacks were carried out simultaneously with an armed uprising against the British in the city of Surabaya.

The British responded by demanding that northern Bandung be rid of much of its population and serve as a base for wealthy European elites and its own military. The governor and the Indonesian national administration, who were seeking a compromise with the imperialist powers, accepted this request. The city was effectively divided into a northern zone, controlled by the British, and a southern zone, where a newly created Indonesian police force had authority. At least 100,000 residents of northern Bandung left in the space of several months.

In March 1946, after the resumption of clashes between colonial troops and nationalist forces, the British extended their demand, issuing an ultimatum that all Bandung be rid of the Indonesian militia. In statements to city officials, this would be accompanied by an operation to secure British control over all of Bandung.

Faced with the prospect of a bloody crackdown, as happened in Surabaya, nationalist forces led by radical independence leader Nasution retaliated by declaring a general evacuation of southern Bandung on March 24. an attempt to prevent their use by the British and Dutch. The fire quickly spread uncontrollably.

Estimates of the number of residents who have fled vary. It was estimated at the time that there were only 16,000 people left in northern Bandung, almost none in the south, compared to a pre-disaster population of 380,000. Eighteen months later, a guest reporter described it as a “dead town with grass growing in its streets.”

100 years ago: US rejects trade deal with Soviet Russia

Charles Evans Hughes, photographed in 1931

On March 25, 1921, Charles Evans Hughes, Secretary of State for Administration to Republican President Warren Harding, rejected the resumption of trade relations between the United States and the Russian Soviet Federative Socialist Republic. In a telegram to the Soviet government, Hughes said that the trade discussion could not resume until there was “recognition of firm guarantees for the right to private property” on the part of the Soviets.

Hughes’ statement followed a March 22 letter to President Harding from the All-Russian Central Executive Committee of Soviets proposing a discussion on the subject.

the New York Times reported that Hughes’ position was the result of an extensive discussion by Harding’s cabinet during which Hughes did a two-hour review of the international situation. the Time noted the dire economic distress of Soviet Russia and that the decision of the Tenth Congress of the Russian Communist Party to loosen the reins of capitalist property (soon known as the New Economic Policy) to revive the Soviet economy had been carefully considered in the State Department.

US officials had been anticipating a trade proposal since the UK signed a trade deal with Soviet Russia earlier in March. In January, the US government expelled Ludwig Martens, an unofficial Soviet envoy who was trying to negotiate trade relations between the two countries.

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Could Private Student Loans Be Forgiven Under Biden?

President Biden has directed attorneys at the U.S. Department of Education and the Department of Justice to conduct a legal review of his options to cancel student debt. That legal review is ongoing, and it is unclear what the conclusions will be, although we may know soon.

Biden has consistently expressed support for cancelling student debt, but he has opposed calls for upwards of $50,000 or more in student loan forgiveness, an amount pushed by progressive Democrats and a broad coalition of advocacy groups, labor unions, and civil rights organizations. He has indicated that he would support $10,000 in student loan forgiveness, and he has also argued that any student debt cancellation should be targeted to lower income borrowers.

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But would borrowers with private student loans benefit from any sort of mass cancellation of student debt? Here’s what we know.

Private Student Loans

Private student loans are originated by commercial lenders such as banks, schools, state-related or nonprofit lending authorities, and other private entities. These types of student loans often have higher interest rates than federal loans and fewer repayment options. They may also require a cosigner.

Private student loans differ from an older federal student loan program called the Family Federal Education Loan (FFEL) program, whereby a private lender originated a type of federal loan that was backed or guaranteed by the government. Those types of loans could be eligible for certain federal student loan repayment and forgiveness programs, and can also be consolidated into a government-owned student loan through the federal Direct consolidation program. But purely private student loans cannot access any federal loan programs, and cannot be consolidated into a federal Direct loan.

Biden Cancelling Student Loan Debt Through Executive Action

While Biden has expressed general support for cancelling student loan debt, he has expressed serious doubts that he would have authority to enact any sort of mass student loan forgiveness through executive action. Several leading student loan legal advocacy groups, as well as their allies in Congress (such as Massachusetts Senator Elizabeth Warren), have argued that the Higher Education Act — the sweeping statute that governs much of the federal student aid system — gives the president very broad powers to “compromise, waive, or release” a borrower’s student debt obligations. Borrower advocates have also pointed to the HEROES Act, which Biden (and President Trump, before him) used to suspend payments and interest on government-held federal student loans in response to the Covid-19 emergency, effectively cancelling billions of dollars in student loan interest in the process.MORE FOR YOUIf Biden Cancels Student Loans, It Could Look Like ThisWhat If Biden Doesn’t Cancel Student Loans?5 Signs Biden Won’t Enact Student Loan Cancellation

But other experts disagree. Attorneys at the Department of Education under former Secretary Betsy DeVos concluded that neither the Higher Education Act nor the HEROES Act gives the president the kind of power that advocates of student loan cancellation say exists. In a legal opinion memo, Department attorneys argued that mass student loan forgiveness would be contrary to what Congress intended when it drafted and enacted these statutes. The attorneys concluded that, “Congress appropriated funds for student loans with the expectation that such loans would be repaid” absent extraordinary and “specific circumstances.”

Even if the current legal review being conducted by the Biden administration concludes that mass student loan forgiveness is achievable using executive action, any relief would almost certainly be limited to federal student loans only. The Higher Education Act and the HEROES Act only govern the federal student aid system. Private student loans are governed largely by individual loan contracts and promissory notes between the borrower and lender, with a mix of state and federal regulation.

Biden Could Sign a Bill Passed by Congress to Cancel Private Student Loans

The Biden administration has repeatedly stated that the President would gladly sign a student debt cancellation bill passed by Congress. And there have been several recent proposals that could benefit private student loan borrowers:

  • Last year, the House passed a bill that would provide for $10,000 in private student loan forgiveness for borrowers experiencing financial hardship as a result of the pandemic.
  • Also last year, an amendment to the National Defense Authorization Act would have provided up to $10,000 in financial assistance to borrowers to help them pay down their private student loans.
  • In February, Senate Democrats unveiled the Medical Bankruptcy Fairness Act of 2021. This bill would make several reforms to the U.S. bankruptcy code, and would make it much easier for student loan borrowers (including those with private student loans) to discharge their federal and private student debt in bankruptcy — something that is currently very difficult to do because of the bankruptcy code’s harsh treatment of student loan debt.
  • Earlier this month, the House passed the Comprehensive Debt Collection Improvement Act, which would allow private student loan borrowers and their cosigners to discharge their loans if they become totally and permanently disabled.

While these bills are promising, they face long odds in the Senate, where Democrats hold only a bare majority, and most legislation requires buy-in from Republicans to overcome a filibuster. In addition, Congress’s attention is currently on other matters including infrastructure legislation, police reform, and voting rights.

Ultimately, significant private student loan reform and cancellation is possible, but it’s a long shot, and Biden has limited powers to address private student loans unilaterally using executive authority. It would probably take Congressional legislation that passes both the House and the Senate for there to be sweeping private student loan forgiveness. Whether that will happen remains to be seen.