Steiker arranges $23.6M for 4 K-mart properties

Real Estate Weekly, Feb 10, 1993

Via unusual securitization financing arranged by Jerome J. Steiker & Co., Inc., a real estate investment banking firm, the owner of four new retail properties net leased to K\Mart Corporation s receiving a number of a typical benefits.

The $23.59 million funding arranged by Steiker & Co. consisted of four fixed-rate 25-year mortgages.

Located in Texas. Nevada and Tennessee, the free-standing properties contain an aggregate of 417,000 leasable square feet, says Jerome J. Steiker, president of the company. They all are expected to be in operation by the end of the first quarter of 1993.

The financing was placed with an affiliate of a major midwest commercial bank on behalf of J&W Management Corporation of New York. Because of the way the pooled mortgages were securitized, the borrower received a number of unusual benefits, reports Steiker:

* The final fixed interest rate was significantly lower than going rates quoted by traditional institutional lenders for a 25-year loan

* The loan-to-value ratio exceeded 90 percent

* The loan did not require cross-collateralization of the four properties

* Future transfers of individual properties are permitted at

* The loans are non-recourse

* The closing costs of the transaction were minimized by the pooling of the four properties into a single transaction.

According to Steiker, a similar pool of securitized mortgages, aggregating over $100 million, is being assembled for funding for a group of separate owners.