Merrill Lynch's $103M Financing Shows Institutional Lending Interest Still High

Austin-based Capital Commercial Investments and an investment fund partner acquired 1300, 1350 and 1400 Merrill Lynch Drive in Hopewell last week, doing so with a $103.6M acquisition loan arranged by Cushman & Wakefield’s John Alascio, Chris Moyer and Gloria Aboagye-Agyeman.

Given the investment-grade tenancy and a relatively significant amount of equity provided by the buyer at closing, it attracted multiple bids from balance sheet and CMBS lenders, with financing ultimately provided by affiliates of Barclays and Morgan Stanley.

“The transaction goes to show that a lot of lenders in this environment, while they take into consideration the larger market vacancy as well as rental rates and dark value, put a lot of weight behind a credit tenant and their ability to repay,” said Alascio, a managing director in the firm's equity, debt and structured finance group.

The three Class-A office buildings comprise nearly 554k SF on a larger campus of 12 buildings built for Merrill Lynch in 2000 and 2001. Nine of the buildings are occupied by Merrill Lynch (including the three buildings in the transaction). The three others were sold in 2013, vacated by the wealth management firm and fully leased to a diverse tenant roster.

Princeton is one of New Jersey’s few institutional markets, and Class-A office assets have a vacancy of around 12%, with the overall office market at 18% to 20%.

“From our standpoint, that feels good,” Alascio said. “In seven to 10 years, we’ll have a market with strong fundamentals and some of the nicest assets on the market if these buildings are released.”

Alascio said the equity, debt and structured finance group is doing a significant amount of institutional asset financing in the Tri-State area, and he predicted 2017 will be another strong year for investors looking for yield in this market.

“Interest rates, despite the uptick, are still compelling from a historical perspective,” he said. “There will also be an uptick in recapitalization opportunities, and we look forward to looking for them from both an equity and debt structuring perspective.”  

In December, Hopewell's planning board approved an amendment to the township's master plan that will allow for a new continuing-care facility and additional residential development along Scotch Road, where the Merrill Lynch campus is located.

In other Cushman & Wakefield news, the team of Gary Gabriel, Andrew Merin, David Bernhaut, Brian Whitmer, Andrew Schwartz and Frank DiTommaso this week announced the sale of Mack-Cali’s 440 Route 22 East in Bridgewater — also known as One Grande Commons — to American Equity Partners. The purchase price was not disclosed.

The three-story building is home to pharmaceutical, engineering and law firms, among others, and offers access to I-287, I-78, and Routes 202 and 206. The buyer is planning cosmetic and amenity improvements to further enhance the building’s market appeal.

This is the third property the Cushman & Wakefield team has closed with the Edison-based investor this year.

Merin, Bernhaut, Gabriel, Whitmer and Cushman & Wakefield's Andrew MacDonald also arranged Mack-Cali's $26M, off-market purchase of a three-building office property in Red Bank from Alfieri Co.

The buildings — 100 and 200 Schultz, and 230 Half Mile Road — comprise 281k SF and sit adjacent to another asset in Mack-Cali's portfolio. The REIT plans to incorporate them into one cohesive campus with shared amenities.