R EAL E STATE J OURNAL the most comprehensive source for commercial real estate news
ISSUE HIGHLIGHTS Volume 24 Issue 5 March 16 - 29, 2012 Northern NJ POM: Hance Construction project reclaims dormant industrial site
TIAA-CREF awards leasing & property mgmt. assignments Cassidy Turley secures $70.5m permanent financing for AMB/Prologis portfolio
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selected by TIAA-CREF, a fi- nancial services organization, to provide leasing and property management services for 1616 N. Fort Myer Drive in Arling- ton, VA. Cassidy Turley’s Chris Sowick, Krysta Hardiman, Dar- ian LeBlanc and Laurie McMa- hon will handle the leasing of the 303,262 s/f ClassAbuilding. Reggie Mullins will handle the property management. “This assignment is a testament to the integrated commercial real estate services that Cassidy Turley prides itself on provid- ing our clients,” commented Joe Stettinius, President of Cassidy Turley. “We look forward help- ing TIAA-CREF create value in this asset by providing our best-in-class leasing and prop- erty management services,” he continued. 1616 N. Fort Myer Drive is a 19-story building located in the Rosslyn submar- ket of Arlington. Major tenants include John Snow, Inc., Pho- ton Research Associates, Inc., Smart Border Alliance and the GSA. ■ and desirable corporate head- quarters, this acquisition corresponds with our overall conservative, disciplined in- vestment strategy,” said Rob- ert Micera, chief investment officer, office and industrial, for Cole. “The Morris County, New Jersey, office submarket boasts great fundamentals, considering its strong eco- nomic base and educated workforce, and we are pleased to add The Medicines Com- pany headquarters to our growing portfolio of corporate real estate.” Constructed in 1979, the facility was expanded and re- modeled in 2008 to make it a premiere Class A office space. Robert Corry, vice presi- dent, acquisitions, office & industrial, represented Cole in the transaction. Kevin P. Welsh, senior vice president with CBRE, represented the seller. ■
ASHINGTON, DC — Cassidy Turley a leading commercial
real estate services provider in the U.S., announced that it secured $70.5 million in debt financing for the AMB/Prolo- gis Maryland Portfolio, which consists of 24 office buildings located in suburban Mary- land. Cassidy Turley’s John Campanella, senior managing director and Paul Spellman, associate vice president, ar- ranged the bank loan on behalf of the owner, a New England based Institutional Investor. The AMB/Prologis Maryland Portfolio is a well-leased, multi- tenanted office portfolio totaling over 800,000 s/f, with buildings located in the White Marsh and Baltimore-Washington Corridor submarkets. Both submarkets have a large Federal Govern- ment presence and are expe- riencing a growth in presence of the defense/cyber security industry. In other news, Cassidy Tur- ley, announced that it has been
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Endurance RE Group acquires a $4.36m warehouse building
1616 N. Fort Myer Drive
Cole RE Investments acquires The Medicines Company Headquarters for $53 Million
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PARSIPPANY, NJ — Cole Real Estate Investments an- nounced the acquisition of a 176,000 s/f, Class A office property located in Parsip- pany, leased to The Medicines Company. The property, which Cole purchased from The
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BEST of 2011
The
R EAL E STATE J OURNAL ’s
Section C
Financial Digest .................................. 7-12A New Jersey ........................................ 13-26A DelMarVa ........................................... 27-32A Pennsylvania .......................................... Section B Best of 2011 ........................................... Section C Directory Upcoming Spotlight COMMERCIAL OFFICE PROPERTIES March 30th
8 Sylvan Parkway
Hampshire Companies for $53 million in an all-cash transac- tion, is located at 8 Sylvan Parkway and serves as the pharmaceutical firm’s global headquarters. There are approximately 12 years remaining on the current lease term, with two
five-year renewal options. The Medicines Company is a global pharmaceutical company fo- cused on advancing the treat- ment of critical care patients in a hospital setting. “With the location of the property, long remaining lease term, scheduled rent increases
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A Inside Cover — March 16 - 29, 2012 — Mid Atlantic Real Estate Journal
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Real estate financing experts are easy to find...
$24,000,000 Multi-Family Rental Bethlehem, PA
$15,000,000 Office Building Summit, NJ
$22,000,000 Multi-Family Rental Morris Township, NJ
$4,550,000 Industrial Building Secaucus, NJ
$11,000,000 Office Building Iselin, NJ
When you know where to look. The current economy has everyone looking for ways to reduce costs. Refinancing your property can make a big difference. At The Provident Bank we make loan decisions locally. Why wait for someone in another state or time zone to review your application, process it and make their lending decision? Our commercial real estate specialists are right here where you are. We can build customized lending solutions to meet your needs and timeline. Custom solutions, local decision-making, quick turnaround – call us today and experience the Provident difference.
For more information contact Patti Patriarca, SVP patricia.patriarca@providentnj.com 732.726.5516
Equal Opportunity Lender Equal Housing Lender Member FDIC
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Mid Atlantic Real Estate Journal — March 16 - 29, 2012 — 1A
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MAREJ A DVERTISERS D IRECTORY 2A — March 16 - 29, 2012 — Mid Atlantic Real Estate Journal Allied Building Corp. .................................................................30C Aztec Architecture......................................................................33C Barry Isett & Associates ............................................................15B Beacon..................................................................................... 4B,3C Ben Franklin Tech Partners......................................................20C Berger Organization ..................................................................19C Bergman RE Group......................................................................7C BL Companies ............................................................................ 11B Bohler Engineering....................................................................26C Brasler .......................................................................................IC-B Bruce Coin Consulting............................................................... 10A Bussel Realty Group .................................................................. 25A Butler Mfg .................................................................................. 21A Cassidy Turley............................................................................15C CBC Bennett Williams........................................................ 5B, 40C Cervelli Mgmt. Corp. ................................................................. 19A Chambers Architecture Inc........................................................ 20A CIRC Commercial-Industrial .................................................... 31A Columbia Bank........................................................................... 11A Community Investment Svcs ......................................................9C Cooper-Horowitz, inc.................................................................... 9A Cronheim Mortgage ................................................................... 11C Cushman & Wakefield ........................................................... 3C,5C Deerwood ...................................................................................... 8A Dermody Properties .....................................................................4C Design Point ...............................................................................15B Dischell Bartle & Dooley ...........................................................26C DMR Architects ..........................................................................20C Earth Engineering .......................................................................4B Falcon Energy Consultants .......................................................25C Fameco Real Estate ...................................................................22C Fitzpatrick Lentz & Bubba................................................ 15B,35C Fix Asphalt ...............................................................................BC-A Gebroe-Hammer Assoc...............................................................14C Gerber/Somma Assoc. ............................................................ IBC-A Gibbons .........................................................................................1C Gloucester County NJ................................................................28C Greenbaum Rowe .......................................................................35C Griffin Land..................................................................................2B Hance Construction, Inc ............................................................29C Hartz Mountain Industries .......................................................23C Harvey Hanna ................................................................1A,29A,9C Heller Industrial Parks ............................................................. 17A HFF...............................................................................................7C High Associates ............................................................................7B Hinerfeld.......................................................................................1B Hylant Environmental...............................................................13B Investors Realty Inc................................................................... 28A K&W Engineers ......................................................................... 11B Kaplin Stewart ............................................................................. 2A Katz Properties ...................................................................... IBC-B Kislak Company Inc.......................................................... 16A,IC-C KW Comm’l.-James Balliet..........................................................2B Landcore Engineering ...............................................................13B Landmark JCM.......................................................................... 31A Lebanon Valley...........................................................................12B Lipinkski.......................................................................................9B LMS Commercial .........................................................................8B M&E Engineers, Inc. .................................................................24C M. Miller & Son............................................................................ 3A Marcus & Millichap ........................................................11C,IBC-C Marvin Comm’l. Products..........................................................21C Matrix ......................................................................................... 15A Max Spann Real Estate Co........................................................13C Mc Gowan Builders, Inc.............................................................30C McMahon ......................................................................................3B Mericle Comm’l. RE ............................................................... BC-B Meridian Capital Group ...................................................... 3A,17C Metro Commercial................................................................ 4B,11C NAI CIR........................................................................................5B NAI Comm’l. Partners ............................................................... 11B NAI Emory Hill ..........................................................................37C NAI James E. Hanson ............................................................ BC-C Nave Newell ......................................................................... 4B,25C Northmarq.......................................................................... 23A,39C O’Donnell & Naccarato ..............................................................27C Ondra-Huyett Associates.............................................................3B Patterson Woods......................................................................... 31A Penns Northeast ..........................................................................2B Perseus Realty..............................................................................2C Poskanzer Skott Architects ....................................................... 24A Prism...........................................................................................18C Progress Realty Advisors ...........................................................16C Property Owners Assoc .............................................................. 32A Provident Bank .........................................................................IC-A R.S. Phillips Steel ...................................................................... 20A RE/MAX of Reading ..................................................................... 6A Regal Bank ................................................................................. 22A Ricker Danzig..................................................................... 14A,34C ROCK Commercial................................................................. 6B,5C Rose Metal Systems .................................................................FC-B RSC Architects ...........................................................................33C SEBCO........................................................................................ 14A Sheldon Gross Realty................................................................. 14A Sloan Street................................................................................31C Sustainability Symposium .......................................................... 3A The Prestige Group ......................................................................2B Thomas Phoenix Int’l................................................................. 20A Tranzon Auction ........................................................................... 5A Tristate ...................................................................................... 35A Vantage ....................................................................................... 32A WP Realty ..................................................................................12C
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Mid Atlantic R EAL E STATE J OURNAL Publisher ............................................................................Linda Christman Co-Publisher .........................................................................Joe Christman Section Publisher ..............................................................Michael Campisi Section Publisher ................................................................Elaine Fanning Senior Editor/Graphic Artist ................................................ Karen Vachon Production Assistant ........................................................ Rachel Rugman Office Manager ...................................................................Joanne Gavaza Editorial Consultant ............................................................. Ben Summers Guest Columnist .................................................................Barbara Anisko Mid Atlantic R EAL E STATE J OURNAL ~ Published Semi-Monthly P.O. Box 26 Accord, MA 02018 (Mail) 312 Market Street, Rockland, MA 02370 (Overnight) Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, P.O. Box 26, Accord, MA 02018 USPS #22-358 | Vol. 24 Issue 5 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
ver the past several years as businesses struggle to ride out the tough economic times, they have had no choice but to down- size. Tied to commercial leases for more office or retail space than they need, an assignment of the lease or the subletting of the extra space seems like an attractive way of saving on expenses. In making the deci- sion whether to assign or sublet, the tenant should first carefully examine its lease to determine whether the lease contains any provisions prohibiting or re- stricting assignment or subleas- ing. Commercial leases, like any other contracts, are governed by their terms. Therefore, whether a tenant has the right to assign a lease to another party or to sublet the leased premises to another tenant depends on the language of the tenant’s lease with the landlord. If the lease does not contain language prohibiting or restricting the assignment or transfer of a ten- ant’s interest, a tenant is free to assign or transfer all or part of its interest. A tenant is not O By Barbara Anisko, Esq. A tenant’s right to assign or sublet a commercial lease
required to obtain prior consent of the landlord, unless the lease contains language requiring the tenant to obtain prior consent of the landlord. Inmaking the decisionwheth- er to assign or sublet, the tenant should also understand the le- gal differences between the two concepts. An assignment of a lease is the transfer by the ten- ant of all of the tenant’s rights and interest in the lease. In an assignment, although the as- signee tenant effectively steps into the shoes of the assigning tenant, the assigning tenant continues to remain liable to the landlord on the lease. With an assignment, if the assignee breaches, the landlord has the
continued on page 3A A sublease is different from an assignment. A sublease is a separate contract between the transferring tenant and the subtenant. The sublease may transfer all or a part of the leased premises, for all or a part of the lease term, and under terms that are similar or materially different from the lease. As with an assignment, the tenant remains liable to the landlord on the original com- mercial lease. With a sublet, the landlord does not have a legal right to enforce the terms of the original lease or sublease right to enforce the terms of the lease against the assigning ten- ant or the assignee tenant.
Contact: Barbara Anisko, Esq. 910 Harvest Drive, Blue Bell, PA 19422-0765 • 610-260-6000 • www.kaplaw.com Other Offices: • Cherry Hill, NJ 856-675-1550 • Philadelphia, PA 215-567-3120 Kaplin Stewart A t t o r n e y s a t Law Real estate law from the ground up. Experience Counts. Count On Us.
Mid Atlantic Real Estate Journal — March 16 - 29, 2012 — 3A
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M ID A TLANTIC R EAL E STATE J OURNAL Division of Houlihan-Parnes Realtors, LLC GHP Office Realty handles 123,000 s/f lease renewal
They wrote the policy.
We make sure they write the check.
R
OCKLEIGH, NJ — GHP Office Realty rep- resented the owner in
completing one of the largest office leases in the state of New Jersey in 2012, a 123,000 s/f office and laboratory renewal and expansion at 8 King Road in Rockleigh. The tenant, Spectra East is a division of Fresenius Medical Care Holdings, Inc, which is the world’s largest integrated dialy- sis company. The 8 King Road location is the East Coast execu- tive headquarters for Spectra East and the only laboratory and testing facility serving the entire eastern half of the United States. After searching the entire tri state region for a newer location, Spectra determined that its in place state of the art infrastructure and world class wet laboratory remained its most attractive option. Their against the subtenant in the event of breach. There are many different practical and legal consider- ations involved in negotiating and documenting the terms of an assignment or sublease in- continued from page 2A
M. MILLER & SON Public Adjusters Since 1960
1211 Liberty Ave., Hillside, NJ 07205 ● Tel: 908-355-4800 adjuster@mmillerson.com ● www.mmillerson.com
8 King Road
grow to over 600 people within the next few years. 8 King Road was purchased by the principals of GHP Office Realty and a group of private investors in 2000. The property has 190,000 s/f and 800 parking spaces. The property boasts two back-up generators, abundant and multiple sources of power and state of the art fiber optic systems. The building has lim- ited availability of space. ■ quences of such transactions and their competing interests are protected. Barbara Anisko is a prin- cipal of Kaplin Stewart in the Business & Commercial Litigation Department. ■
ability to maintain their edu- cated and highly skilled work force, abundant parking, and access to public transportation all proved a compelling com- bination to renew and expand at 8 King Road. The building’s ready ability to handle a 10,000 foot expansion helped clinch the renewal at 8 King Road. Spectra East currently employs over 500 people at the site and expects the number of employees to cluding the legal consequences to the tenant under the assign- ment or sublease if landlord ter- minates the lease. Therefore, an experienced real estate attorney should be consulted so that the parties understand the conse-
Recent Financings Arranged By Meridian Capital Group
A tenant’s right to assign. . .
Hunters Glen 1,124 Units $49,000,000 Delran, NJ
Steward’s Crossing 241 Units $27,200,000 Princeton, NJ
Thursday March 29, 2012
The Franklin Institute Now in its second year, this event brings together industry, university and community leaders to share best practices, ask challenging questions and provide cutting edge information about sustainability in the Delaware Valley.
Nationally Acclaimed Keynote Speakers:
West Creek Village 306 Units $16,000,000 Elkton, MD
Woods at Narraticon 150 Units $16,950,000 Deptford, NJ
15 Panel Discussions: Covering diverse topics, such as energy management systems, community engagement, building retrofits, starting a sustainable business, electric cars, LEED/Energy Star issues and more. · Panelists include Kevin Kampschroer, Director of High Energy Buildings for GSA; Judy Wicks, Founder of BALLE; Rob Watson, a founder of LEED; Leisha John, Americas Director of Environmental Sustainability at Ernst and Young; Audrey Zibelman, CEO of Viridity and other industry and thought leaders
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Industry Partners:
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4A — March 16 - 29, 2012 — Mid Atlantic Real Estate Journal
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M ID A TLANTIC R EAL E STATE J OURNAL A UCTIONS
New members elected NJ State Society of Auctioneers The auction method of marketing is one of the most widely used methods of marketing real and personal property throughout the world.
Numerous first-place awards for excellence Nicholls Auction Grp. attends VAA Convention
or over 50 years, the Virginia Auctioneers Association (VAA) has been recognized for leadership in the auction industry. We continue to be indebted to eight far seeing gentleman who met at the Hotel Roanoke in May 1958 and chartered the VAA whose purpose was then and continues now to be to promote and advance the auction profession. The Nicholls Auction Mar- keting Group believes it is important to continue the tradition began in 1958 and help to lead the VAA and the auction industry in the 21st century and was well repre- sented in Charlottesville. This year’s convention spot- lighted awards presentations, election of officers and direc- tors, as well as hours of semi- nars, from nationally known speakers and experts in the action industry, to enhance an auctioneer’s ability to better serve the public. F
tion Marketing Group re- ceived numerous first-place awards for excellence in mar- keting and Johan Nicholls was interviewed by local tele- vision media about the auc- tion industry and appeared in a TV broadcast about the convention. We believe active participa- tion in the Virginia Auction- eers Association is a signifi- cant factor in the success of any auction company and are proud to be a part of it. Every year, over a quarter- trillion dollars in property and assets are sold by auc- tioneers. The auction industry continues to grow, becoming a popular method for sell- ing goods and services for many industries in the United States. The auction industry is vast and diverse with auc- tioneers specializing in a va- riety of markets, such as art, antiques, automobiles, ma- chinery, real estate, personal property, and charity. ■
The auction method of mar- keting is one of the most wide- ly used methods of marketing real and personal property throughout the world. Billions of dollars of real and personal property are sold every year using this exciting method. The auction method can turn assets into cash in a cost-ef- fective and efficient manner. Choosing a professional auc- tioneer for your particular needs is an important step in this process. The State of New Jersey does not require a license to be an auctioneer. Therefore, any- one can advertise and promote themselves as auctioneers, but they may not have the appropriate knowledge, edu- cation or professional ethics that is required of an NJSSA member.
TheNJSSAis a group of like- minded auctioneers who have joined together voluntarily to hold themselves accountable to a higher level of integrity and professionalism. When choosing an auc- tioneer, always choose an NJSSA member, and ask for references. For more informa- tion on the New Jersey State Society of Auctioneers, please contact, Earle Steeve III at: earle@maxspann.com On February 15, 2012 NJS- SA members elected Bob Dan as the new president. Wes Pace is the new Vice Presi- dent; Earle Steeves is now the Secretary/treasurer. Board members are Mary Kenney, Harrie Copeland, Max Spann Jr and Steve Miranti. Joe Bodnar is now the Chairman of the Board. ■
Shields Jones
Beyond the intangibles gained from meeting with those with who we have much in common, some of our com- pany highlights were that Shields Jones was elected president by the Association and John Nicholls and Kelly Strauss were recognized our outstanding leadership on the Board of Directors. Additionally, Nicholls Auc-
Mid Atlantic R EAL E STATE J OURNAL
N E W J E R S E Y • P E N N S Y LVA N I A • D E L AWA R E • M A RY L A N D • W A S H I N G T O N D . C . • V I R G I N I A • Auctioneers Directory
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We Sell On Consignment— Estates, Gold, Silver, Autos, Tools, Collectibles, Jewelry, Coin’s, Paper Money, Antiques, Real Estate, Land Or Any Thing Of Value ONE CALL DOES IT ALL 804-683-0133 www.dixonsauction.com
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Please contact Mr. Kelly Strauss for more information 40 CARRIAGE HILL LANE, FREDERICKSBURG, VA 22407 NICHOLLS AUCTION MARKETING GROUP (540) 226-1279 www.nichollsauction.com
www.AuctionBrokers.net 410-426-2622
Mid Atlantic Real Estate Journal — March 16 - 29, 2012 — 5A M ID A TLANTIC R EAL E STATE J OURNAL A UCTIONS
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6A — March 16 - 29, 2012 — Mid Atlantic Real Estate Journal
www.marejournal.com M ID A TLANTIC R EAL E STATE J OURNAL Marcus & Millichap sell a 45-unit Apartment bldg. Gorman & Shover of M&M rep both in $3.7m office sale P HILADELPHIA, PA — Marcus & Mil- lichap Real Estate
Featuring our Annual COMMERCIAL OFFICE SPOTLIGHT MARCH 30, 2012
This issue will publish as a special pullout section. . . featuring:
• A special LISTING of all the Office Space transactions recorded in MAREJ throughout 2011/2012 • Bi-lined Articles submitted by Expert office brokers • Office Market Reports compiled by major companies • Society of Office and Industrial Realtors Organization • Special feature on NAI and it’s member firms • National Association of Industrial and Office Properties Linda Christman Mid Atlantic Real Estate Journal 1-800-584-1062 Fax: 781-871-5299
Investment Services an- nounced the sale of DaVita Anchored M.O.B., a 22,193 s/f office property located in Philadelphia, PA, according to Spencer Yablon, Regional Manager of the firm’s Phila- delphia office. The asset commanded a sales price of $3,700,000. Matthew Gorman and Michael Shover, investment specialists in Marcus &Mil- lichap’s Philadelphia office, had the exclusive listing to market the property on be-
7198 Castor Avenue
Matthew Gorman Michael Shover
“7198 Castor Avenue was a challenging property to position in the market but ultimately commanded an aggressive cap rate and high price per square foot for medical office in North- east Philadelphia” noted Gorman. “The locally based 1031 exchange buyer, a re- peat client, found that this asset met most if not all of their investment criteria which included a strong tenant mix, long term leases and rent escalations.” Da- Vita Anchored M.O.B. is located at 7198 Castor Av- enue, consists of three medi- cal tenants and was 100% occupied at the time of the closing. In other news, Marcus & MillichapReal Estate Invest- ment Services announced the sale of FRANKLIN GARDEN APARTMENTS, a 45-unit apartment prop- erty located in Hackensack, NJ, according to Michael J. Fasano, Vice President/Re- gional Manager of the firm’s New Jersey office. The asset commanded a sales price of $4,870,000. Thomas McConnell, CCIM and Kevin McCrann, Associ- ate Directors of the National Multi Housing Group in Marcus & Millichap’s New Jersey office represented the seller FranklinApartments, LLC. Mr. McConnell and Mr. McCrann also secured the buyer, Hackensack As- sociates, LP. “The sale price at a 6 Cap Rate, is a testament that the demand for multifam- ily in northern NJ remains strong. Both the buyers and sellers are reaping the awards of our low interest rate environment” McCon- nell states. McCrann adds, “The property was built and managed by FranklinApart- ments LLC since the 1960’s and we believe the new own- ers will continue to improve the property and utilize our analytical study to maximize future returns.” ■
half of the seller, a developer. The buyer, a limited liability company, was also secured and represented by Mat- thew Gorman and Michael Shover, investment special- ists in Marcus & Millichap’s Philadelphia office.
RARE DEVELOPMENT OPPORTUNITY $4.5 Million ∙ 33 Acres
1
For More Information Please Contact:
3801 Penn Ave Sinking Spring, PA
The subject property located in Sinking Spring PA (just minutes from Reading, PA) is 33 acres of land and is pre-approved for a three story, 55+, independent living facility with 130 units and 20 more in the future, and 80 townhouse units. Ready to develop. Public Water & sewer.
Eddy Peng, CCIM, CIPS RE/MAX of Reading Office: (610) 670-2770 x3078 Cell: (610) 223-0567 Email: EddyPeng2@verizon.net
F INANCIAL D IGEST
Mid Atlantic Real Estate Journal — March 16 - 29, 2012 — 7A
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EEHAWKEN, NJ — Beech St ree t Capital, LLC an- Executive VP Rosen originates Arcadia Nursing facility transaction Beech Street Capital provides $12.5 million to refinance Northern New Jersey apartments W
nounced that it has provided a $12.5 million Fannie Mae conventional loan to refinance The Simone, a new, ground- up construction building in Weehawken, New Jersey. The transaction was originated by Meridian Capital Group, LLC, and was financed by Beech Street Capital as part of its correspondent relation- ship with Meridian. This was the first agency loan for the borrower and their first experience with Beech Street. Beech Street delivered on the borrower’s PHILADELPHIA, PA — David A. Henrich, senior vice president of NorthMarq Capital’s (NorthMarq) Phila- delphia Regional office ar- ranged first mortgage ac- quisition financing of $2.468 million for 2.6 acres of land in Allentown, Pennsylvania. This asset consists of 2.6 acres which will be developed for two separate pad tenants. CVS will be the major tenant at the site on a 25 year ground lease with multiple options. Financing was based on a 25-year term and a 25-year amortization schedule and was arranged for the bor- rower by NorthMarq through its relationship with William Blair & Company, a Credit Tenant Lease Lender. Ac- cording to Henrich, the bor- rower needed maximum loan proceeds to acquire the land that is to be developed for two separate tenants. Loan proceeds from the CVS lease were sufficient to close the transaction. Complicating the transaction was CVS’s delayed rent commencement date and obligations for por- tions of the site development. He said, “The lender did an excellent job of structuring around the lease that con- tained release provisions for the second pad site and
Arcadia Nursing & Rehabilitation Center
The Simone
requests for a low rate and maximum proceeds, and ex- peditiously rate locked the
transaction 30 days after re- ceiving the application. With over 25 years of experience in
the real estate industry, the borrower currently owns 10 apartment properties in New Jersey and New York. Charles Grussgott the Me- ridian mortgage finance advi- sor on the deal was impressed with Beech Street’s efficiency and agency expertise, as this was his first experience with Beech Street as well. “This was one of the best experienc- es I have had with a lender. The Beech Street team did an excellent job from start to finish.” Built and completed by the borrower in early 2011, The Simone consists of 50 multi- family apartment units in a four-story building. Located in Hudson County, across the Hudson River from Manhat- tan, the property exhibited a very strong lease-up rate over the last 10 months and beginning in July, the prop- erty achieved 85 percent oc- cupancy. It is currently 100 percent occupied and accord- ing to the appraiser, Realty Services Inc., the demand for housing in the subject’s mar- ket exceeds supply. The fixed-rate loan has a 10-year term and 30 years of amortization payable on an actual/360 basis. In other news, Beech Street Capital, LLC announced that it has provided an $8.9 mil- lion HUD 223(a)(7) loan to refinance Arcadia Nursing & Rehabilitation Center, a 128- bed skilled nursing facility in Hamilton Square, New Jersey. The transaction was originat- ed by Joshua Rosen, executive
vice president of Beech Street Capital. Working from Beech Street’s Chicago office, Rosen leads the company’s nation- wide healthcare efforts. The borrower had 28 years left on an existing $9.0 mil- lion FHA loan. Beech Street accomplished an important goal for the borrower by in- creasing the loan term to 35 years, something that is becoming increasingly rare with HUD. By extending the loan term, Beech Street was able to refinance the property with substantial debt service coverage savings to the bor- rower and further increased savings with a significantly reduced interest rate. Beech Street also skillfully managed the underwriting process, which allowed for a seamless and expedited clos- ing. “Beech Street was an ab- solute pleasure to work with,” says Mike Gabriel, principal of Arcadia Retirement Com- munity, Inc. “A term exten- sion was absolutely essential for us, but we understand that they are not frequently granted. We were thrilled when it came through.” Beech Street expects to see more refinance activity in the seniors market in the coming year. “The conditions are really favorable right now for anyone with a cur- rent HUD- insured mortgage to refinance under Section HUD 223(a)(7),” Rosen says. “Not only are rates at all-time historical lows, but HUD has all but eliminated the (a)(7) queue.” ■
Henrich & Nalbandian of NorthMarq Capital arrange $14.408 million in mulitple mortgages
Citizens Bank
extended timeliness by CVS before they were required to develop their site and to build their building.” In other news, Greg Nal- bandian, Senior Vice Presi- dent and Managing Director of NorthMarq Capital’s New Jersey Regional office, ar- ranged a first mortgage refi- nance in the amount of $11.94 million for the RBS Citizens Bank Portfolio. This portfolio consists of 16 RBS Citizens Bank branches located inNew York, Connecticut, Pennsyl- vania and Delaware. Work- ing exclusively on behalf of a major REIT client, financing was based on a 5-year term with 3 years interest only and the following 2 years on a 40-year amortization sched- ule through NorthMarq’s
relationship with a regional bank. According to Mr. Na- lbandian, this transaction is a 60% LTV, non-recourse, cross collateralized loan with a 5-year loan term against an average lease term remaining of only 7 years in secondary and tertiary markets. He stated, “Given the shorter average lease term remain- ing coupled with the tertiary markets, there was not much fanfare for this financing on any level. However, we were able to identify a re- gional bank that liked the credit and the borrower and stepped up in a big way by offering 60% proceeds on a full non-recourse basis with a substantial interest only period, which was extremely important to the client.” ■
8A — March 16 - 29, 2012 — Financial Digest — Mid Atlantic Real Estate Journal
www.marejournal.com
F INANCIAL D IGEST
egional Capital Group (“RCG”) closes on an $8.9M discounted note Case Study by Paul Braugngart, Regional Capital Group Regional Capital Group closes on bridge funding for two student housing facilities R RCG. leasing of the units, which made a huge difference, but it was after the fact.
tension fees in an effort to buy more time to finance the exist- ing lender out of the deal and this is where RCG stepped in. RCG structured 100% financ- ing of the discounted payoff amount in addition to a por- tion of the extension fee in the time frame set forth. This not only allowed for the Borrower to realize the discount, but to also save the assets and not have to come out of pocket with additional funds. RCG utilizes a diverse back- ground and vast knowledge to complete transactions spread across a broad range of asset
classes. RCG focuses not only on the execution of specific deals, but also no understand- ing each client’s needs and goals, to complete short term or permanent funding. We also of- fer alternative loan structures which may fall outside of the traditional lending sources to expedite a closing should an opportunistic situation arise. In addition to a primary role as a lender, RCG partners with developers and investors to acquire performing and nonper- forming real estate assets, RCG has a unique team with expe- rience in real estate lending and investment, development, entitlement, construction and property management. RCG’s staff consists of problem solv- ers with the resources to create unique solutions to complex real estate funding issues. They have closed in excess of $5 Bil- lion in real estate funding and investment over their careers. RCG continues to provide capital for a variety of real estate projects in challenging times. They work together with other lenders, investors, and developers to provide funding for troubled projects or those that have lost funding due to the contraction of the market. RCG utilizes it funding capa- bilities to take advantage of opportunities with short time frames and makes decisions very quickly when presented with specifics on a situation. The principals have weathered troubled markets in the past and have provided consulting and loan work out direction to lenders and investors of all types for over 30 years. This transaction is an example of a situation where RCG utilized its vast experience and intu- ition to solve a problem. Paul Braugngart is the founder and president of Regional Capital Group (“RCG”). ■ BETHESDA, MD — Marc Tropp, Managing Director of Eastern Union Commercial, announced the refinance of a mixed use retail of- fice building in the heart of downtown Baltimore, MD for $3,100,000. The building consists of 102,568 s/f of rent- able space, currently leased as office space with first floor retail. ■ Tropp of EUC refinanced for $3.1m
The Borrower purchased the sites back in 2002 and had substantial equity in the as- sets and continued to achieve strong returns until the eco- nomic downturn. In order to keep occupancies high, while also staying competitive in the marketplace, the rental rates were lowered, which in turn reduced the overall net operat- ing income. This caused the property to go into default and end up with a special servicer. The company then reorganized its strategy for the sites, as it related to the marketing and
purchase of two 100% oc- cupied Stu- dent Housing Facilities lo- cated in the R i c hmo n d , Virginia area. The Borrow- er is a na-
Because of this situation, the Borrower had the opportunity to buy the note (which wraps both assets into one loan) at a substantial discount. The Bor- rower starting working with an existing relationship they had at a local bank, until the bank suddenly changed their geo- graphical lending parameters which disqualified the asset. The borrower was left with less than 40 days before they would lose the assets. They had been and continued to pay ex-
Paul Braugngart
tional, multi-family property ownership, investment and re- development organization with an extremely large portfolio of assets and a past borrower of
$5,850,000 Eastern PA Refinance Multifamily 98 Units
$50,000,000 Newark, NJ Centre Market Bldg. Office 380,000 S/F
$19,990,000 Charleston, WV Chase Tower Class A Office 280,761 S/F
$10,000,000 Ridgefield, NJ Shopping Center Retail 132,400 S/F
180 Sylvan Avenue Englewood Cliffs, NJ 07632 | P 201-947-2300 | F 201-947-2323 | Deerwoodcap.com
Mid Atlantic Real Estate Journal — March 16 - 29, 2012 — 9A
www.marejournal.com
$163,800,000
Montoya Apartments Branford, CT
Hoyt Bedford Apartments Stamford, CT
Seramonte Apartments Hamden, CT
Morgan Manor Apartments Stamford, CT
The undersigned arranged the above financing
51 East 42nd Street New York, NY 10017 (212) 986-8400 Fax: (212) 983-0512 www.cooper-horowitz.com
REAL ESTATE FINANCING
10A — March 16 - 29, 2012 — Financial Digest — Mid Atlantic Real Estate Journal
www.marejournal.com
F INANCIAL D IGEST
By: Bruce J. Coin, Bruce Coin Consulting, Inc. The Current Commercial Mortgage Market
T
he big commercial real estate news was the February 21st bank-
It is a strategic move that could potentially have a greater impact on the commercial mort- gage market than the obvious addition of Grubb and Ellis’ one hundred or so commercial real estate offices to BGC’s overall group. Cantor Fitzgerald, since only really starting its CMBS plat- form in 2010, has now become one of the more highly visible originators of CMBS II product. Using the Grubb and Ellis office network as its own pipeline, Cantor, if so inclined, could create its own, virtually unlim- ited, source of locally generated and underwritten CMBS loan
applications dramatically en- hancing investor interest and confidence. Such a controlled feeder structure employing prudent loan underwriting and with oversight and checks and balances could lead to their pos- sibly dominating the industry. Time will tell if they move in that direction. How to unwind Fannie Mae and Freddie Mac has been on regulator’s minds for close to two years. On Tuesday Febru- ary 21st, the Federal Housing FinanceAgency (FHFA), created by The Housing and Economic RecoveryAct of 2008, sent a new strategic reform plan for that to
Congress. Their plan calls for creating a new infrastructure for the secondary mortgage market to reduce the scope of Fannie’s and Freddie’s market share while simplifying and shrinking their operations. They commented that Fan- nie’s and Freddie’s ongoing ability to provide a stable liquid flow of mortgage backed securi- ties to investors is essential to stabilizing house prices and ensuring stability in the value of approximately $3.9 trillion of currently outstanding MBS. During their conservatorship, Fannie’s and Freddie’s multi- family market share has grown
but they do not dominate that market as they do the single family market. FHFA’s pro- posal pointed out that the mul- tifamily platforms, unlike the single family operations, share underwriting risk either with their loan originators (Fannie’s DUS program) or by issuing classes of securities (Freddie) where investors share the risk. The proposal went on to say that Fannie’s and Freddie’s multifamily businesses have “weathered the housing crisis”, generated positive cash flow and that their multifamily busi- nesses are not subject to reform efforts. The FHFA proposal does require them to undertake a market analysis of the viability of their multifamily operations without government guarantees and the likely prospect of their operating on a stand-alone basis after attracting private capital. For a variety of reasons, the FHFA indicated that contract- ing Fannie’s and Freddie’s commercial multifamily busi- nesses should be approached differently (than their single family business) and may be accomplished using a more di- rect method. In the interim, it appears as if “business as usual” will continue with Fannie’s and Freddie’s multifamily lending operations and that’s good news for apartment borrowers. In other news: •Consistent with past prom- ises of more “transparency” the minutes of the FOMC’s Febru- ary meeting included a tre- mendous amount of additional information and insight into board members thinking. •The Financial Accounting Standards Board (FASB) contin- ues to analyze its initial recom- mendation that long term real property leases be reflected on company balance sheets as long term liabilities. How that plays out can have a major impact on tenants especially chain-anchor retailers. It can also impact the benefit of doing a purchase- leaseback transaction to effect off balance sheet financing. Despite being recently bom- barded by gasoline price in- creases, there is no question that the economy is improving. All signs point to this national election year as being better for the commercial real estate and mortgage markets. Stay tuned. Bruce Coin is director of Bruce Coin Consulting, Inc. ■
ruptcy filing by Grubb and Ellis and si- multaneous a n n o u n c e - me n t t h a t it was being acquired by BGC Pa r t - n e r s , I n c .
Bruce Coin
(“BGC”). BGC is a global finan- cial services firm that last year acquired the Newmark Knight Frank organization. BGC’s larg- est shareholder is the Cantor Fitzgerald brokerage firm.
Need commercial real estate help? If you are a lender, attorney, developer or realtor, we can provide it.
Education Webinars, classrooms and eLearning Custom and off-the-shelf programs Topics
• Analyze, Underwrite and Value Income Property (apartments, office, retail, industrial flex, other) • Income Property Lease Analysis • Direct Capitalization and Yield (DCF) Capitalization • Typical Mortgage Commitment Clauses • Construction Lending Basics • Structuring Joint Ventures and Participating Mortgages • Financing Properties with Prior Ground Leases • Net Leased, Single Tenant Credit Financings • Credit and Non-Credit Tenant Financial Statement Analysis • Commercial Appraisal Review
Bruce Coin is the former co-founder and CEO of Pro-gressive Mortgage Corp. He is an acknowledged commercial mortgage financing and property valuation expert with over 40 years of experience. He has lectured to classes of the University of Pennsylvania’s Wharton School, and has written for, taught, and addressed many special interest groups including banks, law firms, appraisal organizations, commercial real estate organizations and private real estate companies. He is an IDECC Certified Distance Education Instructor (CEDI) and has written numerous courses about commercial real estate, finance and appraising. Bruce currently holds Certified General Real Estate Appraiser certificates in PA, NJ and CA.
Expert Services • Investigative reports – appraisal reviews • Consultation and case analysis • Deposition and court testimony • Individual property or portfolio analysis
brucecoin.com (856) 906-8240
Mid Atlantic Real Estate Journal — Financial Digest — March 16 - 29, 2012 — 11A
www.marejournal.com
F INANCIAL D IGEST
ISELIN, NJ – Merid- ian Capital Group, LLC, announced the For multi-family and mixed-use properties Meridian Capital Group, LLC negotiates $69.3 million in financing T term. The transaction was negotiated by David Cohen and Russ Drebin.
ated by Abe Schonfeld. Meridian negotiated a new mortgage in the amount of $2,700,000 on a three-story mixed-use building in Bal- timore, MD. The property contains 34 apartments and 8 commercial spaces. The loan features a rate of 4.47% and a 10-year term. The transac- tion was negotiated by Joshua Gorsky. Anewmortgage of $2,000,000 was placed by Meridian on a four-story multifamily build- ing situated on East Vernon Road in Philadelphia, PA. The property contains 52
apartment units. The loan features a rate of 4.25% and a seven-year term. The transac- tion was negotiated by Russ Drebin. Anewmortgage of $2,300,000 was negotiated by Meridian for the purchase of a multi- family complex located on Schraffts Drive in Waterbury, CT. The property contains 64 apartment units. The loan features a rate of 4.25% and a five-year term. The transac- tion was negotiated by David Cohen. Meridian negotiated a new mortgage in the amount of
$4,300,000 on a garden apart- ment style multifamily com- plex totaling 27 units on Windsor Drive in Palisades, NJ. The loan features a rate of 4.32% and a 10-year term. The transaction was negoti- ated by Russ Drebin. Anewmortgage of $1,900,000 was placed by Meridian on a four-story brick multifamily building on 60th Street in West NewYork, NJ. The prop- erty contains 44 apartment units. The loan features a rate of 4.15% and a seven-year term. The transaction was ne- gotiated by Steve Tessler. ■
A n e w mortgage of $23,150,000 was placed by Meridian on the Hid- den Creek Apartments multifamily c ommun i t y
f o l l o w i n g t r a n s a c - tions: M e r i d i a n nego t i at ed a new mort- gage in the amount o f $32,900,000 on Berkshire
Russ Drebin
David Cohen
located in Bayville, NJ. The property contains 236 units. The loan features a rate of 3.90% and a seven-year term. The transaction was negoti-
at the Shipyard, a luxury mul- tifamily building containing 93 loft style units in Hoboken, NJ. The loan features a rate of 4.13% and a seven-year Mainardi Mgmt. Co. closes new loans WAYNE, NJ – The Mainardi Management Co. announced the closing of several new loans during the past year. Last spring, the company obtained $19.3 million loan on the Shops at Windsor Green, a 157,000 s/f shopping center in Princeton, New Jersey. The 10-year fixed-note loan was with Aviva Life and Annuity Company of Des Moines, Iowa. Andrew Stewart and Anna Westhoff of CronheimMortgage placed the loan with Aviva. In the summer of 2011, the company closed a $4.1 mil- lion mortgage on the Franklin Shopping Center, a 57,600 s/f property located in Sussex County, New Jersey. The new loan was with Amalgamated Bank of New York and was placed by Greg Nalbandian of Northmarq Capital. In February of this year, the company closed two loans. One was for Union Medical Park, a 200,000 s/f medical office building ian Union, New Jersey which at one time operated as Union Hospital. The $7.5 mil- lion loan was obtained from Customers Bank of Wyomiss- ing, Pennsylvania and was negotiated byAndrew Stewart, Anna Westhoff and Dev Morris of Cronheim Mortgage. Also in February of 2012, the company obtained an $11,750,000 mortgage on the Greentree Square Shopping Center, a 110,000 s/f shopping center in Marlton, New Jersey anchored by Whole Foods. The new loan was placed with Allstate Insurance Company and carried a fixed rate of 4.05% for ten years. Tom Didio and Mike Cerullo of Holliday Fenoglio Fowler obtained the mortgage. ■
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