Month: December 2015

Categories
Berkadia

Berkadia Originates $14 Million in Financing for Multifamily Property in Seattle

(BRK.A), (BRK.B)

Berkadia has arranged $14 million in financing for Latitude Queen Anne, a multifamily property located in Seattle.

Senior Managing Director Mitch Thurston and Senior Director Andy Ahlers of the San Francisco office secured the loan through Berkadia’s Fannie Mae program.

The full-term loan includes 10 years of interest-only debt service payments.

Latitude Queen Anne is 95 percent occupied and consists of 76 loft, one- and two-bedroom units. Community amenities include a rooftop with grilling and al fresco eating areas, resident lounge with a coffee and tea bar, fitness center and dog run with a pet station. Located at 500 Third Ave. W., the property is approximately two miles northwest of downtown Seattle.

“Seattle’s economy is strong, and the region’s multifamily market and lending activity is following suit,” Mitch Thurston said. “Berkadia’s strong West Coast presence allowed us to leverage our regional expertise to secure an attractive loan, which enabled the borrower to capitalize on favorable market trends.”

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA. The company was among the top Freddie Mac and Fannie Mae multifamily lenders for 2013.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
NetJets

NetJets Paying Cancellation Fees as Profits Grounded

(BRK.A), (BRK.B)

No one likes cancellation fees when they fly, and for Berkshire Hathaway’s NetJets Inc. it’s when they don’t fly, or more specifically when they don’t buy that they incur fees.

NetJets is ponying up cancellation fees as it cuts orders for aircraft purchases and grapples with slumping earnings even as revenues grow.

Columbus, Ohio-based NetJets has run into turbulence this past quarter with its earnings down a whopping 37-percent. Earnings for the first nine months of the year were down a less dramatic but still meaningful 7-percent.

“In 2015, NetJets incurred increased non-fuel flight operation costs and increased general and administrative expenses, including fees to cancel certain aircraft purchases,” Berkshire Hathaway said in its most recent quarterly financial report.

Total revenues were up 5-percent but the company reported that the revenue growth was “partially offset by lower flight operations revenues, which were primarily due to lower fuel cost recoveries.”

Back in 2012, NetJets announced the largest private jet purchase in history, with a total of 425 aircraft scheduled to be added to its worldwide fleet. At the time, it valued the total purchase from Bombardier and Cessna at $9.6 billion.

Now, it looks like some of those orders will go unfilled.

Berkshire Hathaway purchased NetJets, the leader in fractional jet ownership, in 1998 for $725 million.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Lubrizol

Lubrizol Building 66,000 Square-Foot Building in Texas

(BRK.A), (BRK.B)

Berkshire Hathaway’s wholly-owned specialty chemical company, Lubrizol Specialty Products Inc., is planning to build a 66,000 square-foot building in Bryan, Texas.

Under the terms of the Chapter 380 agreement that was approved earlier this month by the Bryan city council, Lubrizol will receive 100 percent tax abatements in year one, 70 percent in year two, and the tax abatements would then decrease by 10 percent each year, ending at 10 percent in year eight.

Lubrizol will also be reimbursed an amount not to exceed $75,000 for development costs including site plans, platting and permit fees for the new facility. The reimbursement is eligible upon upon the issuance of a Certificate of Occupancy for the facility.

In exchange for the abatements, Lubrizol agrees to construct the 66,000 square-foot building, a minimum of $25 million in real property while maintaining a minimum increase in Brazos Central Appraisal District value of $20 million.

In addition, Lubrizol must hire at least 24 new employees with an increased payroll of $1.5 million.

About Lubrizol

Based in Wickliffe, Ohio, Lubrizol owns and operates manufacturing facilities in 17 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 7,500 employees worldwide. It sells its specialty chemical products in over 100 countries.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.