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Friday, 25 January 2019

Office Complex in Newark, N.J., Gets Recapitalized

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Commercial Real Estate Direct Staff Report

A venture involving Garrison Investment Group, Axonic Capital, Taconic Capital Advisors and Onyx Equities has recapitalized three of the four office buildings that comprise the Gateway Center complex in Newark, N.J.

The transaction, said to have been valued at about $325 million, involved some $215 million of mortgage financing from Bawag P.S.K., an Austrian bank. The deal was brokered by JLL's capital markets group, while Milbank, Tweed Hadley & McCloy represented Garrison and Onyx in the deal, which brings together the ownership of three-quarters of the largest office complex in the city.

Prudential Financial, which remains a substantial tenant at the complex, also invested in the recapitalization, through its Impact Investing operation, a 43-year-old business line that invests in assets that have a social impact on areas. Those would include charter schools, affordable housing and historic redevelopments. Its investments include the historic, but long-abandoned Hahne & Co. department store building in downtown Newark that was completely overhauled and is now occupied by tenants that include a Whole Foods Market. The business has made more than $2.5 billion of investments since its founding.

The Gateway buildings share a concourse level and are connected by a series of covered pedestrian bridges to Newark Penn Station, a major commuter-rail and bus hub. Because each of the buildings has been separately owned, the concourse level, which is slated to be redeveloped with additional retail space, had become neglected. The new ownership plans to invest in a massive overhaul of the concourse level in order to attract additional retail tenants.

The three buildings had secured CMBS debt that was resolved over the past three years. More recently, the venture negotiated deeds-in-lieu of foreclosure, taking title to the underlying collateral buildings. That facilitated the recapitalization.

Gateway 1, which has nearly 515,000 sf on 26 floors and includes a parking garage with a 342-vehicle capacity, had backed an $85.2 million mortgage securitized through Morgan Stanley Capital I Trust, 2007-IQ13; Gateway II, with 782,806 sf on 18 floors that had backed a $121.2 million loan securitized through CD, 2006-CD3, and Gateway IV, with 327,135 sf on 15 floors and had backed a $57.1 million loan in MSC 2006-IQ12.

All three loans had fallen into distress as occupancy had declined. Both Gateway I and IV had large exposures to Prudential Financial, which had reduced its footprints in the buildings as it developed its own headquarters building nearby and consolidated much of its staff there.

The three CMBS loans were resolved in 2016 and 2017. The loan against Gateway I was resolved at a loss of $4.6 million to the trust that owned it; the loan against Gateway II was resolved through the exercise of a fair-value purchase option by a venture of Axonic and Taconic Capital in a deal that generated $79.3 million of net proceeds and that resulted in a loss of $44.8 million to the 2006-CD3 deal, and the loan against Gateway IV was resolved through a deal that generated $31.5 million of net proceeds, resulting in a loss of $27.8 million to the MSC 2006-IQ12 deal.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281. 



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Read 628 times Last modified on Friday, 25 January 2019

Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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