Dealmaker: NorthMarq Capital Secures $171M for Office, Mixed-Use

NorthMarq Capital, Minneapolis, secured $171.3 million for office and mixed-use properties in California and Arizona.

In Menlo Park, Calif., NorthMarq Senior Vice President and Managing Director John Kerslake and Senior Investment Analyst Briana Harney arranged a $157.3 million construction-to-permanent loan for Menlo Gateway Phase II, an under-construction office property located at 125 and 135 Constitution Drive. 

The fixed-rate transaction came with a three-year interest-only term during construction followed by a 14-year permanent term. A life insurance company provided the financing to Bohannon Development Co., El Paso, Texas, and Alexandria Real Estate Equities, Pasadena, Calif.

The Menlo Gateway project is a 16-acre master-planned development that includes a 250-room Autograph Collection hotel and 773,000 square feet of office space, currently fully leased to Facebook.

The development’s finished first phase occupies 100 Independence Drive in Menlo Park and includes 252,000 square feet of space. Phase II, slated for delivery in late 2019, will total 521,000 square feet.

“The construction-to-permanent loan provides attractive fixed-rate financing on the property, effectively mitigating interest rate risk for the long-term,” said Kerslake. “The life insurance company provided a tailored solution that met the needs of the borrower.”

In Phoenix, NorthMarq Senior Vice President Brett Hood arranged $14 million in construction take-out financing for Union at Roosevelt, a mixed-use property with 80 rental units and 9,100 square feet of Class A retail on North 1st Avenue. The 10-year loan included five years of interest-only amortization.

NorthMarq arranged financing for the borrower through its seller/servicer relationship with Freddie Mac, McLean, Va.

“The transit-oriented development is located just north of downtown immediately across the street from the Valley metro light rail within the historic Roosevelt neighborhood,” Hood said. “The transaction posed a number of unique challenges, including a tax abatement structure unique to Arizona, whereby the tax abatement was effectuated through a ground lease with the city, a corporate master lease for 20 percent of the residential units, limited operation history, funding based upon trailing one-month collections and a first-time Freddie Mac sponsor.”