Madison Realty Capital(MRC) provided two first mortgage loans totaling $71.15 million for commercial properties in Northern New Jersey.
The transactions include a $45.0 million loan to finance the acquisition of 2 Gatehall Drive in Parsippany, a 404,515 s/f office property, and a $26.15 million loan for recapitalization of 141 Lanza Avenue in Garfield, a 33-acre, 1.16 million square foot industrial property including warehouse and self-storage uses.
MRC, an institutionally-backed real estate investment firm, funded $33 million at closing to facilitate the borrower’s acquisition of 2 Gatehall Drive within 17 days of sourcing the transaction and reserved a future funding component of $12 million for good-news leasing.
The seller of the property was Piedmont Office Realty Trust, a public REIT that previously purchased the building for roughly $110 million in 2002.
The property is a three-story office building with parking, located on a 19-acre site in a suburban New Jersey office submarket.
The borrower, a regional real estate investment firm, which paid $51 million for the property, plans to re-tenant a portion of the property, modernize the property’s common areas, and enhance the building amenity package.
“MRC specializes in funding for transitional properties, and 2 Gatehall Drive is a great example of how we serve the needs of middle-market borrowers with plans for redevelopment,” said Josh Zegen, co-founder and managing principal of MRC.
“This is a well-located suburban property with great prospects for leaseup of the current availability.”
At 141 Lanza Avenue, the borrower approached MRC to recapitalize the property, which had been in special servicing and under control of a receiver since late 2014, in part due to an underlying tax dispute with the municipality.
After cleaning up the capital structure with funds from MRC, the borrower plans to continue leasing and asset management efforts to fully stabilize the property.
“MRC is experienced with the restructuring process, including special servicing in the CMBS context, and we frequently find solutions to help borrowers navigate those challenges and unlock value,” Zegen added.
“We’re glad to assist in making a better future for this asset. The property should be well-positioned to continue as industrial, or could also support residential development in the future, given the amount of new apartments in the immediate area.”