- DC
The seller of both buildings is Piedmont Office Realty Trust Zimmel Assoc. sells two New Jersey office buildings for over $100 million L YNDHURST/PARSIP- PANY, NJ — David Zimmel , president,
ISSUE HIGHLIGHTS Volume 28 Issue 3 February 12 - 25, 2016
AUCTIONS
15-18A
Zimmel Associates , reports that the Edison, NJ corporate real estate services firm has handled the sale of two class A office buildings located in Northern New Jersey to an undisclosed buyer for a total that exceeds $100 million. The seller of both buildings is Pied- mont Office Realty Trust . In the first transaction, Nine Polito Ave., a 268,000 s/f, class-A office building in Lyndhurst, sold for $50 mil- lion. The 10-story building, located at the intersection of Routes 3 and 17 near the New Jersey Turnpike, is known as Copper Ridge Center and has Polo Ralph Lauren Corpora- tion as a lead tenant. In the second transaction, Two Gate Hall Dr., a 404,500 s/f class-A office building lo- cated just off of Rt. 10 in Par-
Nine Polito Ave.
Two Gate Hall Dr opportunities on the market that met the client’s criteria in dollar amount, property type and location. Alex did sub- stantial research to put these deals together and found the right properties. A lot of hard work was involved and the results were highly successful for all parties.” n
sippany, sold for $51 million. Gemini Technology Services, Inc., a subsidiary of Deutsche Bank AG, is the lead tenant. “We are very pleased to begin 2016 with the closing of these sales,” said Zimmel. Both of these deals were off market and demonstrate the in-depth market knowledge
and dedication Zimmel As- sociates provides and why we attract solid commercial real estate investors. “We are proud of Alex Chazkel , a vice president at our firm, who spoke with a new client who needed to do a sub- stantial 1031 exchange. There were not a lot of investment
For speaking and sponsorship information, please contact: Linda Christman at 781-871-3456 or lchristman@marejournal.com UPCOMING CONFERENCES MARCH 18, 2016 NJ Land Development Summit APRIL 14, 2016 New Jersey Office Summit APRIL 13, 2016 Philadelphia Capital Markets Summit
Progress Capital completes $17.3 million portfolio refinance with $10m cash out
NEW JERSEY — The team at Progress Capital , led by
million with challenging condi- tions: 1) Close in 60 Days 2) Capture 60% Cash Out 3) 20 Year Fixed Rate/25 Year Amor- tization 4) Forward Rate Lock Anderson’s knowledge of the client, financials on file along with immediate access and trusted relationships with the appropriate lenders, gave her the ability to refinance five of the client’s real estate assets, totaling $17.3 million. Properties included Rite Aid and Dunkin’ Donuts locations as well as a $2 million business line of credit. “We are very proud of the long-standing relationships we have with our clients and lend- ing sources. Recently, a client needed a CRE refinance in 60 days. We were able to move fast, since their current financial re- cords are maintained in-house. That, combined with our proven track record with multiple lenders, enabled us to quickly arrange the refinance for $17.3 million which included a $10 million cash out.” said Kathy Anderson. n
founder and p r e s i d e n t Kathy An- derson , ar- ranged the refinance of a commercial rea l es tat e portfolio to- taling $17.3
Kathy Anderson
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Financial Digest................................................5-10A DelMarVa • DC.................................................11-14A Auctions.........................................................15-18A New Jersey................................................. Section B Central NJ. .......................................................7-15B Pennsylvania..................................................19-23A
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MAREJ A dvertising D irectory Alfred’s Auctions...................................................... 16A ARD Appraisal Co.. ....................................................9A Barley Snyder.......................................................... 21A Barry Isett & Associates......................................... 23A Bussel Realty Corp.....................................................9B Capstan.......................................................................3B Chiesa Shahinian & Giantomasi............................ 17B Concannon Miller.................................................... 23A Cooper-Horowitz.........................................................7A CREW LV............................................................ 22-23A Cushman & Wakefield. .......................................... IC-B Deerwood Real Estate Capital...................................6A Denholtz Associates................................................. 13B Designpoint.............................................................. 23A Environmental Systems.......................................... 25A Fortna Auctioneers.................................................. 18A Fowler Companies................................................... 25A Gebroe-Hammer Associates.................................... 18B Hampshire Real Estate Companies. ...................... 16B Harvey, Hanna & Associates.................................. 13A Heller Industrial Parks........................................... 10B Hillcrest Paving & Excavating............................... 25A Hinerfeld Commercial.................................. 25A,IBC-A Hurley Auctions....................................................... 17A Investors Real Estate Agency................................. 25A IOREBA. .....................................................................4A Kaplin | Stewart........................................................3A Kearnybank. ...............................................................6B Marcus & Millichap....................................................4A Max Spann............................................................... 15A Mericle.................................................................... BC-A Meridian Capital Group.......................................... 11B Moonstone Environmental...................................... 23A NAI Dileo-Bram....................................................... 15B NAI Emory Hill. ...................................................... 14A NAI James E. Hanson............................................. 14B NAI Summit............................................................. 25A National Realty & Development........................... BC-B NJ’s Clean Energy Program. .....................................5B NorthMarq Capital.................................................. 20A PennCap Properties. ............................................... 25A Poskanzer Skott Architects........................................2B Real Property Capital.................................................8A Remco Realty Group...................................................8B Rittenhouse Realty Advisors. ................................. 21A SEBCO Laundry Systems....................................... 17B Subway..................................................................... 25A The Berger Organization. ..........................................1B The Kislak Company............................................... 12B WCRE....................................................................... 16B
Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Associate Publisher ................................................................ Steve Kelley Associate Publisher .............................................................Alissa Aronson Associate Publisher ..........................................................Barbara Holyoke Associate Publisher ..............................................................Eric Ballenger Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant ....................................................................Julie King Office Manager .................................................................... Joanne Gavaza Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 312 Market St. Rockland, MA 02370 USPS #22-358 | Vol. 28 Issue 3 Subscription rates: $99 - one year, $148 - 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
Mid Atlantic Real Estate Journal
Urban Pioneers: Not Your Typical Revitalization Tool Rachel Selsky A s part of larger efforts for revitalization, cities throughout New York and the Northeast are look- ing towards adaptive reuse of vacant industrial buildings as housing as a way to attract young, enthusiastic residents to their downtowns. These reuse projects have a positive impact on the surrounding neighborhoods and tend to be attractive to young profes- sionals and those that are part of the Creative Class. The Creative Class is a segment of the population made up of educated young professionals seeking urban lifestyles, and this cohort is often seen as the key to reviving the econo- mies of post-industrial cities. Reports on the Creative Class note that this cohort is often willing to live in older, even gritty, downtown cities earn- ing them the title of “urban pioneers.”1 An example of this can be seen in the City of Rochester where urban pioneers moved into a newly renovated loft building located in an area that would not traditionally be attractive for residential development. The urban pioneers of the Creative Class embraced the frequent freight trains pass- ing their windows and saw the potential of the area with its proximity to the Rochester Neighborhood of the Arts and the Rochester Public Market. The loft building is now filled with young professionals who are investing in the City of Rochester and revitalizing the previously uninhabited neighborhood. Cities around the Country are vying for these vibrant, educated, young profession- als to come and live in their neighborhoods and are even willing to offer incentives such as tuition repayment and other subsidies. One example is the City of Niagara Falls,
who is offering recent college graduates up to $7,000 in loan repayment funds if they buy or rent market-rate properties in a target area of the City. The program has attracted appli- cants from around the country looking to participate in the loan repayment program and who are willing to locate in the City for a two year period. The City believes that this program will help to build a cluster of young talent that will foster entrepreneurial and economic development oppor- tunities while at the same time help to revitalize a struggling neighborhood. Another example of offering incentives to attract urban pio- neers comes from the City of Detroit where a public-private partnership was formed to bring people back to the City to live. Five companies that have operations in downtown De- troit offered incentives total- ing $4 million to employees who choose to live downtown. The Live Downtown program has attracted hundreds of applicants looking to receive financial assistance to pur- chase a home in downtown, which also covers some costs associated with the first-year of owning a home. Residents who already live in downtown can also receive funds for ex- terior work. The City hopes the program will increase the number of young professionals living in downtown and lead to revitalization and increased economic activity for the City. The Cities of Rochester, Niagara Falls, and Detroit are just a few examples of
the many communities in the northeast that are being proactive in their approach to attracting young profession- als and young families into older neighborhoods to act as pioneers for revitalization. Housing preferences have been changing over time; more and more people are looking for an urban lifestyle with access to nightlife, res- taurants, diversity, public transportation, and walkable neighborhoods. Beyond offer- ing incentives to financially entice new residents, cities should consider the following to improve quality of life and initiate the revitalization of older neighborhoods: • Streetscape enhancements •Biking and pedestrian con- nections •Transportation connec- tions to major employment centers •Retail offerings that will appeal to residents (food store, pharmacy, general merchan- dise stores, etc.) •Engaging neighborhood associations •Security •Community events that ap- peal to a wide variety of people from young professionals to families •Business friendly environ- ment that supports small busi- ness and entrepreneurs. Rachel Selsky is a se- nior economic develop- ment specialist at Camoin Associates.Rachel joined Camoin Associates in 2008 after receiving her Mas- ters in Regional Planning from the University at Albany. n
Lee & Associates negotiates sale of Santa Ana office building SANTA ANA, CA — Lee & Associates , one of the larg- est national commercial real estate providers with regional expertise, has closed a $3.285 million sales transaction for a 21,028 s/f office building located at 2001 E. 4th St., Santa Ana. The building was 84% leased. The buyer was an investor and a user that is going to occupy a portion of the building. BrianGarbutt , MiaPham , and Sammy Cemo of Lee & Associates Irvine, represented the seller, SNS Enterprise, LLC. The buyer, HY5, LLC, was represented by Mia Pham of Lee & Associates. With over 800 brokers na- tionwide, Lee & Associates provides specialized commer- cial real estate services on a lo- cal, regional & national level. n
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Q
M id A tlantic R eal E state J ournal Corkery of CBRE represents The Hampshire Cos. The Hampshire Cos. sells 87,927 s/f mixed-use building
“Ask the Professor”
A
&
A landlord’s operating cash flow is derived pri- marily from its tenant leases. The lease agree- ment is the legal contract which spells out the rights and obligations between the two parties. The landlord or lessor is the legal owner of the property while the tenant or lessee has the right to use the property in return for paying rent. The lease agreement contains many important issues such as the amount of space that will be occupied, lease term, renewal rights, cancella- tion and expansion options, maintenance and repair responsibilities, lease concessions (if any), right to sublet and insurance and tax reimburse- ments. All leases would identify which party is responsible for which issues. Most leases are either gross leases or net leases. Which one of the following state- ments about leases is correct? a) The tenant’s expected annual business sales would typically be reported in the lease. b) A landlord would never want to sign a lease with a tenant longer than 15 years. c) In both the gross lease and net lease, a ten- ant may deduct from its rent the fixed costs of property taxes and insurance. d) A landlord may want to offer a tenant several months of free rent to entice that tenant to sign a long term lease in his building. e) There is no difference between a gross lease and a net lease. The correct answer is “D”.
B ILLERICA, MA — The Hampshi re Companies , a full- service, private real estate investment firm with equity in assets valued at over $2.5 billion, has announced the sale of an 87,927 s/f mixed- use industrial building lo- cated at 159 Rangeway Rd. in Billerica, Massachusetts, to the property’s tenant, Lyn- nway Auto Auction, Inc. The buyer has been a tenant of the building since 2011. The mixed-use industrial building features approxi- mately 14% office space as well as 14 dock-high loading doors, two drive-in loading doors, 24-foot ceilings and ample parking. The building is located on six acres and is adjacent to another 30 acres that Lynnway Auto Auction, Inc. currently owns. The property is located just off of U.S. Route 3 and the Treble Cove Rd. intersection which also provides easy access to I-495, Route 128 and I-95. “Any time that we can sell one of our properties to an existing tenant, that deal becomes mutually beneficial for both parties,” said Igor Derbaremdiker , disposi-
875 County Rd. 60
Q
159 Rangeway Rd.
tions director for The Hamp- shire Companies. “Our abil- ity to align tenants with superior locations that help their businesses to prosper drives our success and helps us to succeed in delivering a great value and a desirable result for our investors and the buyer. The communities that we operate in also reap the benefits of having estab- lished brands continuing to do business where they are already comfortable and
have good relationships.” Currently there is 35,054 s/f of space at the property under contract for a sub- lease. David Corkery of CBRE represented The Hampshire Companies in the trans- action. The Stubblebine Company represented Lyn- nway Auto Auction, Inc. The Hampshire Compa- nies is a full-service, private real estate firm based in Morristown, New Jersey. n
A Ronald M. Shapiro is Assistant Professor of Professional Practice in the Finance and Economics Department at Rutgers Business School ofNewarkandNewBruns- wickwhere he teaches real estate finance. Prior toRutgersBusiness School, Ron was SVP with Union Center National Bank.
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M id A tlantic R eal E state J ournal For thoseworking in land, property, const.&infrastructure 60+ professional bodies launch a global consultation on ethics N EW YORK, NY — A coalition of more than 60 professional bodies to submit their feedback on the new International Ethics Standards. related professions will help to bring greater transparency and consistency to global prop- erty markets.
Leading the Real Estate Investment Market Contact us today to access the largest inventory of properties.
Tony Grant , past FIABCI world president and deputy chair of the IES Coalition explained: “The new standard has been written by a group of independent industry leaders and international ethics and compliance experts appointed by Trustees of the IES Coali- tion. Included in the group are prominent real estate representatives from Russia, China, France, the USA, Ger- many, Brazil, Japan, Malay- sia, Canada and the UK. The IES Coalition is organising this three-month consultation to ensure that the final version is high quality, understood and accepted by all participating organisations, practitioners and their clients. Relevant organisations and individu- als throughout the world are invited to respond.” n EQUUS announces sale of Madison River Place PHILADELPHIA, PA — Equus Capital Partners, Ltd. (Equus) , one of the na- tion’s leading private equity fund managers, announced the sale of Madison River Place in Macon, GA. The 240- unit apartment community was sold to Mullberry Proper- ties, LLC for $14.525 million. At the time of the sale the community was 95% occupied. “We received twenty written offers for this well-maintained community that presented investors with a stable and at- tractive yield proposition,” said Greg Curci , VP of Equus who was responsible for overseeing the disposition for the firm. The seller was represented by Robert Stickel of Multi Housing Advisors . Built in 1988, the community is situated within the desir- able North Macon Submarket where it benefits from conve- nient access to I-75. The gar- den-style apartment commu- nity offers a diverse mix of one and two bedroom apartments. Community amenities include a swimming pool, fitness cen- ter, tennis and beach volleyball courts, and playground. An affiliate of Equus ac- quired Madison River Place in 2004 from a publicly traded REIT as part of a six-property portfolio. The transaction was made on behalf of BPG Invest- ment Partnership VI, LP. n
and standards setting organi- zations worldwide, launched a global consultation on ethics principles for those working in land, property, construction and infrastructure. Property and the built en- vironment play a huge role in our lives as well as being a major contributor to the economy worldwide. Ethics guides the behavior of property professionals and builds trust in the profession. Producing one set of International Ethics Standards for real estate and
“ FIABCI is enthusiastically supporting the introduction of new ethical and professional standards which will provide structure, clarity, greater re- sponsibility and value within the real estate and real estate- related industries,” said Dani- elle Grossenbacher , FIABCI World President. Collectively representing many hundreds of thousands of professional practitioners, the IES Coalition is calling on those in the built environment
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21st Annual Developers Night Teaneck Marriott @ Glennpointe Executive Committee Meeting - 4:00pm - 5:00pm Networking & Sponsor Tables - 5:00pm - 6:30pm Dinner & Program - 6:30pm - 8:00pm
IOREBA / SIOR Annual Meeting New York Athletic Club
Executive Committee Meeting - 4:00pm - 5:00pm Networking - 5:00pm - 6:30pm (Open Bar) Dinner & Program - 6:30pm - 8:00pm
F inancial D igest
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Loan provides enhanced flexibility and capital Mack-Cali closes $350m unsecured term loan
HFF secures $63.5m financing for multi-housing development
DISON, NJ — Mack- Cali Realty Corpora- tion announced that it has successfully closed on a new $350 million unsecured term loan, which matures in January 2019 with two one- year extension options. The interest rate for the new term loan is currently 140 basis points over LIBOR, subject to adjustment on a sliding scale based on the Company's unse- cured debt ratings, or at the Company's option, a defined leverage ratio. Mack-Cali en- tered into interest rate swap arrangements to fix LIBOR for the duration of the term loan. Including costs, the loan provides for a current all-in fixed rate of 3.12%. There is no premium or penalty as- E DUNDA LK , MD — Greystone , a real estate lending, investment and advisory company, today announced it has provided a $26 million bridge loan for the acquisition of Three Garden Village Apartments in Dundalk, MD – Baltimore County. The loan was origi- nated by Donny Rosenberg of Greystone. The bridge loan, provided to The SilverBrick Group , carries a two-year term with two six-month extension op- tions. The loan was closed in less than 30 days. Three Gar- den Village Apartments is a 592-unit rental community in Baltimore County consist- ing of brick townhomes and garden style apartments on landscaped grounds with multiple amenities. The Sil- verBrick Group will be re- branding the property under its new name SilverBrick Townhomes. “The SilverBrick Group’s unique investment process and approach to acquisition aligned perfectly with our ability to provide an out- of-the-box, balance sheet bridge financing solution,” said Mark Jarrell , executive vice president and head of Greystone’s Portfolio Lend-
sociated with full or partial prepayment of the term loan. Proceeds from the term loan are being used primar- ily to repay the Company's $200 million, 5.8% unsecured bonds scheduled to mature on January 15, 2016, and to pay down outstanding borrowings on its $600 million unsecured credit facility. Merrill Lynch, Pierce, Fenner & Smith Incorpo- rated, J.P. Morgan Securi- ties, LLC, and Wells Fargo Securities, LLC served as the joint lead arrangers for the term loan. Bank of America, N.A. served as administra- tive agent; JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A., and Capital One, National Association served
as syndication agents; and US Bank National Associa- tion served as documentation agent. Other participants in the loan were PNC Bank, National Association and Ci- tibank, N.A. "With our bank group, Mack-Cali has successfully executed this new unsecured term loan and swapped to a fixed rate for a five year pe- riod. The $350 million term loan provides an attractive source of capital and results in an anticipated new debt maturity in 2021. The debt cost represents significant interest savings to the 5.8 percent bonds maturing this month," said Tony Krug , Mack-Cali’s chief financial officer. n
207 Van Vorst rendering
terfront district. The property will offer views of Manhat- tan, the Statue of Liberty and nearby marinas, and will be the first of a two-phase project that, once complete, will en- compass two adjacent 15-story residential buildings totaling 408 units. Due for completion in 2017, Phase I of the project will have a mix of studio, one-, two- and three-bedroom units and two ground-floor retail spaces totaling 7,237 s/f. Com- munity amenities will include a rooftop swimming pool, fit- ness center, 24-hour concierge, landscaped courtyard, club room, children’s playroom and a 254-space AutoMotion park- ing system. The HFF debt placement team representing the borrow- er was led by senior managing director Thomas Didio . n
JERSEY CITY, NJ — Hol- liday Fenoglio Fowler, LP (HFF) announced that it has secured $63.5 million in fi- nancing for the development of 207 Van Vorst, a proposed 255- unit, 15-story luxury multi- housing community in Jersey City. HFF worked on behalf of 207 Van Vorst Street Re- alty Company LLC , a joint venture between institutional investors advised by J.P. Morgan Asset Management – Global Real Assets (J.P. Morgan) and Fields Devel- opment Group (Fields) , to place the construction loan with Wells Fargo Bank . The property is being devel- oped on a 0.87-acre site situ- ated on Van Vorst St. in the historic Paulus Hook section of Jersey City’s downtown wa- FALLS CHURCH, VA — Eastern Union Fund- ing, a top-10 commercial real estate debt brokerage based in Brooklyn, NY, arranged financing for the $6.75 million acquisition of 7121 Leesburg Pike, a two-story office and retail center in Falls Church. The property consists of five ground-level retail condos and nine second-story office condos. Eastern Union Funding’s Marc Tropp , a senior man- aging director based in the firm’s Bethesda, MD office, negotiated a $4.25 million, seven-year deal fixed at 4.3% with six months interest only. Tropp brokered the loan with regional balance sheet lender
Greystone closes $26m bridge loan in under 30 days for MD Multifamily Property Acquisition
Eastern Union Funding arranges $6.75m financing for purchase of office/ retail space in Falls Church, VA
Three Garden Village Apartments
ing Group. Erik Dowling , principal & director of capital sourc- ing, The SilverBrick Group, added, “Greystone proved themselves a trusted part- ner in real estate financing, exhibited by the smooth pro- cess they led us through. We see a great deal of value-add potential and plan to unlock it beginning with an initial $4 million in renovations on the property. This will represent Phase 1 of what will ultimately be an aggre- gate $12mm transformative renovation of this asset. We could not have initiated those
plans without the crucial interim financing we closed with Greystone.” “Part of our acquisition strategy entails seeking op- portunities in mismanaged properties where reposition- ing can unlock hidden val- ue,” said Aaron Papowitz , Founding and managing principal, The SilverBrick Group. “Greystone was able to help with the realization of our niche-market strategy through an interim financing solution and we look forward to a long-term relationship with the company as a pre- ferred lender.” n
Burke & Herbert Bank on behalf of 7121Metrowest LLC. “We were able to broker an excellent deal by partnering with a regional lender and working in a timely fashion. That we could lock in such a competitive rate - literally within hours of the federal rate hike - made the final prod- uct that much more exciting for all parties involved,” said Tropp. n 7121 Leesburg Pike
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F inancial D igest
A project being developed by HHG Development Associates, LLC Llenrock Group closes on $35 million permanent financing for Trenton Roebling Steel factory lofts
RENTON, NJ — Llen- rock Group , an in- dependent real estate finance and advisory firm, is pleased to announce it has se- cured $35 million in financing for the redevelopment of the old Roebling Steel factory on Clark Street in Trenton, NJ which will be converted into luxury loft apartments. The space will be converted into 138 lofts, a project being developed by HHG Development Associ- ates, LLC . Llenrock Group worked to provide HHGDevelopment with a $16.3 million construction to permanent loan, a $6.3 million T
credited investor. “It was a pleasure to work with our innovative sponsors,” says Tim Deegan, Director of Capital Markets at Llenrock Group, who spearheaded the transaction. “Their vision for the transformation of Trenton was inspirational.” “This project represents a turning point for Trenton. The collaborative effort of everyone involved is a testament to every- one’s belief and support in this project,” said Deegan. The project is the first phase of a six-building mixed-use redevelopment of the Roebling Steel complex. The Roebling
Arbor launches ALEX, an online multifamily agency lending platform UNIONDALE, NY — Ar- bor Commercial Mortgage, LLC , unveiled ALEX (Arbor LoanExpress), the multifam- ily industry’s first ever, all- agency, online loan origination platform. Developed for direct borrowers, brokers and cor- respondent lenders, ALEX is designed to streamline and organize a historically complex multifamily lending process, helping clients easily and effi- ciently obtain market-leading Fannie Mae and Freddie Mac financing. ALEX will provide the fastest loan evaluation in the industry and incorporates the first ever use of e-signature execution for certain forms used in multifamily agency lending. “As a true leader in the small balance agency lending busi- ness, we are both proud and excited to revolutionize multi- family financing with ALEX,” said Ivan Kaufman , Arbor’s chairman and CEO. “We incor- porated our years of success, world-class customer service and small loan experience in building a proprietary technol- ogy that allows us to reach new customers and provide our highly valued repeat clients with an organized, transpar- ent and efficient experience.” ALEX will offer all of the benefits of an automated lend- ing platform while leveraging Arbor’s established multifam- ily finance capabilities and infrastructure ALEX’s leading features in- clude: Online and automated application creation and forms submission; Three-hour or less loan evaluation and feedback from a loan officer with full information completion; Live help chat during all stages of the application process; Fan- nie Mae and Freddie Mac ap- proval of e-signature execution on key forms; 24/7 mobile and desktop access Both Fannie Mae and Freddie Mac were consulted throughout the development of ALEX. n Lofts are located across Route 129 and the Sun Bank Arena with a NJ Transit light rail station on-site. Construction on Roebling Lofts starts February 1st and should be completed by the first quarter of 2017. n
historic tax credit bridge loan, and a $11.5 million New Jersey ERG bridge loan. Additionally,
Llenrock Group assisted the Sponsor in the facilitation of the sale of tax credits to an ac-
Real Estate Journal — Financial Digest — February 12 - 25, 2016 — 7A
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F inancial D igest $33,000,000
2 GATEHALL DRIVE PARSIPPANY, NEW JERSEY A 404,516 square-foot, Class A, suburban office building The undersigned arranged the above financing
622 Third Avenue New York, NY 10017 (212) 986-8400 Fax: (212) 983-0512 www.cooper-horowitz.com
Real Estate Financing
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F inancial D igest
By Brenner Green, Real Property Capital, Inc. The current commercial mortgage market
L
ast week the annual Mortgage Banker’s Association conference
the conference is always a good barometer of the capital markets and this year was
bank and non-bank, disrup- tion in virtually all sectors of financial markets and
the OCC issued a joint state- ment that included a “forceful warning” to banks on “loosen- ing underwriting standards” on commercial real estate and stated that they will “pay special attention” to commercial real estate loans issued by banks in 2016. All of this collective good news has caused mortgage spreads (the premium over treasury bonds that lenders charge to make a loan) to balloon to levels not seen since the real estate recovery began in 2010-2011. Some lenders have decided not to quote loans until fur-
ther notice and a few have formally exited the market. Meanwhile, many borrow- ers seem to think that it is 2006 and that capital is ev- erywhere. Currently, anyone who sees that as the case is staring at a mirage that is about to disappear. This per- ception may be a result of the fact that things were in fact getting pretty loose over the last twelve to eighteenmonths, but whatever the reason there is a disconnect between cur- rent expectations and reality. I predict that by Memorial Day we will see the effects of this divide start to play out in the market. Developers and buyers are going to find out that they cannot get the kind of financing that they thought they could, and the market as a whole is going to be affected. Look for non-banks and life insurance companies to take a bigger role in 2016, while CMBS and bank lenders to write substantially fewer loans than in 2015. Non-bank CMBS lenders are going to be hamstrung by the lines of credit that they rely on to pool loans for sale and the sentiment of the lenders that provide those lines. Look for more CMBS lenders to close their doors this year based on this and their lack of ability (balance sheet) to deal with the regulation requiring them to hold the bottom 5% of each securitization that they issue. To be clear, this is not a pre- diction of “gloom and doom” but rather a statement that there is going to be a realign- ment in the CRE lending landscape this year. This type of shift is inevitably going to lead to many promises made that cannot be delivered on by lenders and brokers. Often times, when a borrower does not like what he hears from a trusted source, he or she will talk to more sources until receiving the answer desired. It is a good time to beware of things that sound too good to be true and to seek good ad- vice from someone you trust to guide you through what is sure to be a turbulent year. R. Brenner Green is a 15 year veteran in com- mercial real estate finance and President of Real Property Capital, Inc., a full service commercial mortgage banking firm based in the Philadelphia suburbs. n
was held in Orlando, for wha t ma y be the last time (I real- ly enjoy the shorter trip t o Fl o r i da over the long slog to San
“Look for non-banks and life insurance companies to take a bigger role in 2016, while CMBS and bank lenders to write substantially fewer loans than in 2015.”
no exception. But the mood was starkly different than the near euphoric tone of last year. A combination of factors including the long- anticipated implementation of recession-era legislation concerning the regulation of financial institutions, both
ongoing concern about the underlying strength of the world’s largest economies have roiled debt markets and caused lenders to take a more cautious stance. In late December three main U.S. regulatory agencies, the Fed- eral Reserve, the FDIC and
Brenner Green
Diego where the conference is held on the odd numbered years and now for the next five years, but it appears I am in the minority). Anyway,
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Real Estate Journal — Financial Digest — February 12 - 25, 2016 — 9A
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By Jessica Zolotorofe, Ansell Grimm & Aaron Completing the 1031 process: DON’T GET THE BOOT!
1 031 exchanges are among the most effective tax-de- ferral tools for real estate
not extend to the next business day, and literally, a single minute after the identification or closing periods expire, in- vestors are out of luck and can only avoid boot to the extent of the replacement properties actually identified and closed prior to the prescribed dead- lines. Calculating and calen- daring reminder alerts for two or three business days before the deadlines is a helpful way to ensure investors will be prepared to timely meet these requirements. (B) Identification Rules. There are three options for identifying potential proper- ties in order to qualify them as “replacement properties” for 1031 purposes: (1) The Three Property Rule : Up to three properties may be identified to replace the relinquished property or properties, without regard to the aggregate purchase prices or market values. (2) The 200% Rule: Any number of replacement prop- erties may be identified, pro- vided the aggregate fair mar- ket value thereof does not exceed 200% of the value of the relinquished property or properties. For example, if the relinquished property was sold for $1,000,000, then the investors can identify any number of like-kind properties so long as their values don’t collectively exceed $2,000,000. (3) The 95% Rule: Any number of properties (even if the total combined value ex- ceeds 200%) can be identified so long as the investors actu- ally consummate the purchase of at least 95% of the value of the properties identified prior to the expiration of the
costs. While the IRS has not pro- vided a comprehensive list of qualifying costs, the following have been deemed acceptable: (i) real estate commissions; (ii) title searches and owner’s title policy premiums; (iii) deed recording fees, realty trans- fer fees and transfer taxes; (iv) costs of due diligence performed in connection with the purchase of a replacement property; and (v) legal fees. Costs incurred in connec- tion with financing are not qualified to reduce 1031 cash requirements, including (i) lender’s title policies; (ii) mort- gage insurance; and (ii) points or fees paid to a lender. The other category of costs which
Closing Period. For example, if the relinquished property was sold for $1,000,000, and five properties are identified with a total market value of $3,500,000, the investor would have to close properties with at least a combined value of $3,325,000 in order to avoid boot. Investors must submit de- tailed descriptions of each po- tential replacement property, in writing and signed, prior to the identification deadline. It is always wise to request that the qualified intermediary countersign, or acknowledge receipt of the identification form in writing, and to keep copies of fax confirmations or other delivery receipts.
The objective of undertaking a 1031 exchange is defeated if an investor ends up with substantial boot. In addition to having to pay taxes on the rec- ognized gain, the investor will also be left with less money to reinvest in replacement properties. To maximize the benefits of a 1031 exchange, investors should structure the transactions to result in as little boot as possible. This article is intended for infor- mational purposes only, should not be considered legal advice, and is not intended to create an attorney-client relationship. Please consult with your attorney and accountant prior to relying on any information contained herein.
investors if c omp l e t e d s t r i c t l y i n accordance with the gov- erning rules and regula- tions. It is important for investors to
Jessica Zolotorofe
consult with their legal coun- sel and accountants to devise a plan in order to properly complete the 1031 process and to avoid “boot”. While not defined in the Internal Revenue Code, the term “boot” has become the common term in the industry to describe any portion of in- vestors’ (i) sale proceeds, or (ii) mortgage debt satisfied in connection with the sale of the relinquished property, which is not reinvested in the replacement properties. Any boot received is taxable to the investor-taxpayers. The most common ways that investors end up with signifi- cant boot are (A) missed dead- lines, (B) improper replace- ment property identification, or (C) miscalculation. (A) Deadlines. 1031 ex- changes are subject to two hard deadlines. The period during which investors must identify all replacement prop- erties (the “ID Period”) expires on the 45th day following the closing of the relinquished property. Thereafter, all re- placement properties must be closed on or prior to the 180th day after the relinquished property was closed. Even if those deadlines fall on a week- end or holiday, the period does PHilADElPHiA, PA — Colliers international Capital Markets (CiCM) , a provider of commercial real estate finance and capi- tal markets expertise, ar- ranged $24 million of debt for the acquisition and re- development of the former West Philadelphia High School located at 4700 Wal- nut St. The 442,200 s/f, four story building will be converted to a 298 unit multifamily prop- erty. Kristopher Wood and John Banas , both senior vice presidents/directors in
do not qualify are adjustments between a buyer and seller such as (i) real property taxes; (ii) insurance; (iii) utilities; and (iv) rent adjustments. In fact, because payment of non-qualified expenses by the qualified intermediary out of exchange proceeds will result in taxable boot, investors should be prepared to bring cash to the closing table to cover those costs. “The borrower wanted to purchase and reposition the former school located in West Philadelphia near University City,” said Wood. “Getting a construction loan was challenging because this was the first development the New York developer had done in Philadelphia, and many thought the location was not ready for 298 new apartments. CICM sourced a loan from a national Real Estate lender who took the time to under-
(C) Calculations. Main- taining and updating a de- tailed “roadmap” or spread- sheet throughout the 1031 exchange process can prove invaluable in effectively navi- gating the transactions. The following is some of the impor- tant information to include: As reflected in the roadmap above, some of the cash re- placement requirement can be satisfied with qualified closing
Jessica Zolotorofe is an attorney with the law firm of Ansell Grimm & Aaron. Her practice is focused on commercial real estate trans- actions, including financing, acquisitions, development, sales, leasing, and structur- ing tax-deferred exchanges. Jessica can be reached at 973- 247-9000 or by email at JTZ@ AnsellGrimm.com. n stand what was happening in University City and what a great opportunity such a large building afforded the developer to build.” Wood added. “Many apartment oper- ators are capitalizing on quality assets that present opportunities for adaptive reuse of older assets into great apartment buildings,” adds Banas. The three year adjustable loan is interest only at Libor plus 3.75% and was done as a Section 47 Historic Tax Credit deal. n
Colliers International’s Capital Markets Team srranges $24million in financing CICM’s Philadelphia office, arranged the loan.
4700 Walnut St.
Real Estate Journal — February 12 - 25, 2016 — 11A
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ILMINGTON, DE — Bernardon an- nounced an exciting Tsionas Management serves as developer, GG+A Construction serves as const. manager Bernardon mixed-use design to revitalize Northwest corridor of Wilmington, Delaware W
After an extensive façade and lobby renovation, Wash- ington REIT delivered Sil- verline Center in the second quarter of 2015. Since then, the company has executed 261,000 s/f of leases, bringing the building to 93% leased status. The 532,000 s/f struc- ture at 7900 Westpark Dr., originally built in 1971, is now a modern, trophy-class property with direct access to Metro’s Silver Line and two I-495 express lanes. In late November, commercial real estate development as- sociation Northern Virginia NAIOP awarded Silverline Center its top awards for Best Building Repositioning and Best Building Common area. In addition to the future restaurant and coffee shop, the building offers extensive amenities including an all- new high-tech conference center, onsite fitness center and child care center, outdoor terrace and lounge, and an expansive skylit atrium with wi-fi and direct access to the below-grade parking garage. provide architecture, interior design, and landscape archi- tecture services for the project, which as currently envisioned includes 170 residential units, multi-level parking for ap- proximately 330 vehicles, and 20,000 s/f of multi-tenant office and/or retail space. The structure is designed to be a transitional gateway into the city’s urban core, an- chored by its signature corner tower element. This iconic form, which includes a vast amount of glazing and exposed structural framing, is wrapped in dark panels with its ex- posed end facing the street. A complementary element is introduced low on the opposite side to balance the structure and create an entry portal for the residences. The apartments will have the latest in resident services
tifamily development com- munity with over 4,400 units currently in design or under construction. The firmhas also designed a number of other projects in the area, including several additions to the Tower Hill School, less than a mile away from the new 2000 Penn- sylvania Ave. development. This new project will act as the catalyst to begin the redevelopment of this neigh- borhood helping to reinforce smart urban growth and rein- force pedestrian connections. “We are pleased and honored to be selected as the architects for this landmark project,” said Bill Holloway , a prin- cipal of the firm. “It exempli- fies the economic potential of Wilmington’s Union Street corridor as well as Wilming- ton’s pent-up demand for luxury apartment living.” n
design project that prom- ises to help revitalize the surrounding area: a five-story mixed-use development at 2000 Pennsylvania Ave. in Wilmington. This project is a collabo- ration between Bernardon and Tsionas Management, Inc. , a prominent developer in New Castle County. Tsio- nas acquired the property in October, and has since been pursuing the opportunity to create a vibrant mix of retail and luxury apartments on this under-utilized but high profile site approximately 1.5 miles from the city center. GG+A Construction of Newark, Delaware will serve as con- struction manager. Bernardon was selected to TYSONS, VA — TenPenh restaurant, which operated in Washington, DC from 2000 to 2011, is poised for a revival in a new location. Passion Food Hospitality – whose proprietors are chef Jeffs Tunks, DavidWizenberg, and Gus DiMillo -- has signed a lease for 6,395 s/f of space at Washington REIT ’s newly renovated Silverline Center in the heart of Tysons, VA. TenPenh, named for its origi- nal location at 10th St. and Pennsylvania Ave. NW, is scheduled to open next year. Washington REIT also has leased retail space at Silver- line Center to Bourbon Cof- fee. The international coffee producer and purveyor will start offering full service in the spring of 2016. In addition to its own sustainably grown and produced coffee, Bour- bon Coffee will offer a full breakfast and lunch menu. Bourbon Coffee first opened its doors in Kigali, Rwanda in 2007, and has expanded to eight different locations across Rwanda and the US; the Tysons location will be
2000 Pennsylvania Ave. rendering
such as a state-of-the-art fit- ness center, yoga studio, and co-working spaces. Outdoor spaces are abundant including an interior courtyard complete with amenities such as a pool, sun deck, outdoor kitchens, and living spaces. Most of the
residential units will have direct balcony access from their units, while the top floor will include a penthouse level complete with select rooftop access. Bernardon has a strong presence in the regional mul-
TenPenh and Bourbon Coffee lease 6,395 s/f at Washington REIT’s Silverline Center in Tysons, VA its ninth.
Silverline Center
Attracting more than a mil- lion views per week from the Capital Beltway, Silverline Center already has attained iconic status with its glass curtain wall illuminated with hundreds of LED lights that can be programmed to display virtually any color scheme. Through the end of the year,
the building will enliven the night sky with hourly holiday- themed dynamic light shows, while displaying holiday col- ors between shows. Silverline Center is part of the transformation of Tysons Corner from a suburban office environment to a transit-ori- ented mixed-use community.
“We are thrilled to welcome TenPenh and Bourbon Cof- fee to Silverline Center,” said Washington REIT senior director Anthony Chang . “With these tenants in place, Silverline Center will not just be a great place to work, but also will become a local dining destination.” n
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