Dealmaker: JLL Secures $77M for Corporate Headquarters in Pennsylvania
JLL, Chicago, secured $77 million for Saint-Gobain Corp.’s North American headquarters in Malvern, Pa.
JLL Managing Directors Keith Largay and David Hendrickson, Senior Vice President Chad Orcutt and Vice President Fiorentina Malko worked on behalf of 90 North Real Estate Partners, London.
The property’s two buildings total 321,000 square feet, triple-net leased to Saint-Gobain Corp. Santander Bank and Citizens Bank provided the acquisition financing.
“The property features Class A+, LEED Gold certified office space with a 15-year lease to a strong credit tenant, all of which drove significant interest from the lending community,” Largay said.
Orcutt called the asset a strong investment due to its high-end renovations and its location in Malvern, which accounted for nearly one-third of total suburban Philadelphia absorption last year.
In Kennewick, Wash., Security Properties and JLL secured $25 million in bridge-to-resyndication financing and a $34 million tax-exempt loan with extended interest rate lock for 455-unit affordable housing property Heatherstone Apartments.
JLL Managing Director Tim Leonhard led the debt-placement team.
“The bridge loan, combined with the forward rate lock tax-exempt loan, allowed Security Properties to quickly and efficiently acquire much-needed existing affordable housing stock and to cement plans for the preservation and rehabilitation of the affordable housing stock 30 months from now,” Leonhard said.
Leonhard noted that Freddie Mac’s new bridge-to-resyndication program allows dedicated affordable housing developers to compete with traditional cash-on-cash buyers to quickly acquire existing affordable housing stock and eliminates interest rate risk on a future preservation transaction. “We see significant runway and increased demand ahead for this loan product,” he said.
The 82.5 percent loan-to-value ratio bridge loan included three years of interest-only payments with a 2.87 percent initial rate. The tax-exempt loan featured a fixed 4.63 percent rate on a 17-year term with two years of interest-only followed by a 35-year amortization schedule.
“This transaction presented several challenges: with the tax-exempt loan, we were able to close quickly and compete with conventional buyers and forward rate lock the tax-exempt bonds, mitigating a key risk in the transaction,” said Bryon Gongaware, Affordable Housing Manager Director at Security Properties. “With this financing, Security Properties has a well-defined plan to execute a significant renovation to the property that will improve the apartment community and preserve housing affordability for the long term.”
Leonhard said the tax-exempt loan interest rate lock offered the flexibility of a 10 percent downward resizing without penalty should certain loan sizing assumptions change between initial closing and the tax-exempt loan’s closing. “The borrower also has the ability to increase the tax-exempt loan amount at final closing at a blended rate should income exceed the amount underwritten at initial closing,” he said.
