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Cloverleaf taps CMBS to help finance Zero Mountain acquisition

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Cloverleaf Cold Storage is tapping the securitization market to help finance its acquisition of Zero Mountain, a cold storage warehouse provider with five locations in Arkansas.

The company recently obtained a $530 million mortgage from two banks, Goldman Sachs and JPMorgan Chase, secured by 18 industrial cold storage and distribution facilities (and certain equipment used at such facilities) totaling over 5 million square feet across seven states. Thirteen of the properties were previously securitized in transaction called GSMS 2018-CHILL that was completed in February 2018; the other five were acquired in the Zero Mountain transaction.

Proceeds from the mortgage, along with $99.8 million of equity and $4.2 million of debt related to other assets, was used to refinance the $366.4 million 2018 transaction, fund the $225 million purchase of Zero Mountain, fund a $30 million reserve for future expansion, and pay $12.6 million of fees and expenses.

The mortgage has an initial term of two years and can be extended by one year up to five times or a total of up to seven years; it pays interest of Libor plus 2.15%, and no principal, for its entire term. It is being used as collateral for a new offering of commercial mortgage bonds called CCST 2019-CHL2. Morningstar Credit Ratings expects to assign an AAA to the senior tranche of notes to be issued, which benefits from 53.9% credit support.

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