Dealmaker: Phillips Realty Capital Structures $50M Office Acquisition Loan

Phillips Realty Capital, Bethesda, Md., arranged $49.6 million of debt financing for two separate, contiguous office properties in Herndon, Va., adjacent to Amazon Web Services’ east coast hub.

Northridge II (photo courtesy Goodstone LLC)

The subject properties, Northridge I and II, jointly contain 258,450 square feet of office space.

Bridge Investment Group, Salt Lake City, lent the funds to a joint venture between Goodstone LLC, Washington, D.C., and Waterfall Asset Management LLC, New York. The financing included funds to renovate and combine the properties into one integrated campus with shared amenities.

Goodstone President Stephen Durr said his firm’s relationships with two different property owners allowed it to purchase the properties from separate sellers at the same time. “By consolidating ownership, we can make high-impact investments at competitive rates, timed to align with growth around the new Metro [commuter rail station] so the value of the new combined asset will exceed the sum of its parts,” he said.

The Washington Metro public transportation system plans to open the Innovation Center Metrorail station and mixed-use transit center nearby later this year.

Bridge Investment Group Managing Director Jay Haberman said the assets are well located to serve a growing tenant market of technology, cyber-security, healthcare and defense firms. He noted upcoming lease expirations will allow Goodstone to implement its renovations.

“The financing structure includes ‘good news’ money to maximize the upside of Goodstone’s aggressive stabilization plan,” said Phillips Realty Capital Principal John Sieber. “Good news” money is additional funds given the borrower upon certain good news events such as a large new lease signing.

A Cushman & Wakefield team led by Executive Managing Director Drew Flood and Senior Associate Shaun Collins represented the Northridge I seller in the transaction. JLL Managing Director Bill Prutting and Senior Vice President Jim Molloy represented Northridge II’s seller.

Tags: Amazon.comBridge Investment GroupCushman & WakefieldGoodstone LLCJLLPhillips Realty CapitalPRCWaterfall Investment Management