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Monday, 17 April 2017

Hertz Offers for Sale Jacksonville's Bank of America Tower

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Commercial Real Estate Direct Staff Report

Hertz Investment Group is offering for sale the Bank of America Tower in Jacksonville, Fla., and is said to be looking to generate $105 million, or nearly $151/sf. It's hired CBRE to market it.

The Woodland Hills, Calif., investor had purchased the 696,676-square-foot office property, at 50 North Laura St., three years ago for $88 million. At the time, it was about 68 percent occupied.

To fund its purchase, Hertz had lined up a total of $79.4 million of financing from JPMorgan Chase Bank, which securitized a $35.5 million piece of that through JPMorgan Chase Commercial Mortgage Securities, 2014-FL6. Some of the remaining financing, which included $31 million of mezzanine debt, was designed to be gradually funded to pay for tenant improvements and leasing commissions, among other things.

The financing matures in July, but can be extended for up to two additional 12-month terms.

The 42-story building, the tallest in Jacksonville, hasn't seen a substantial increase in occupancy - at the end of last year it was 69 percent leased. But that's while it has seen substantial vacancies involving its two largest tenants.

Bank of America, which had been the building's largest tenant, leasing nearly 97,000 sf, since has reduced its footprint to only 21,100 sf. It's on a lease that matures in July 2019, but it has the option to terminate it in July, subject to a one-year notice, at a cost of one year's rent. And law firm Holland & Knight, meanwhile, occupies 42,285 sf through December 2020. In 2014, it had occupied 50,209 sf. It also has an early out, for which it would have to pay a $700,000 termination fee.

The occupancy rate in the 5 million-sf market around the property increased only marginally, to 74.9 percent at the end of last year, from 74 percent in 2014, according to Reis Inc. But CBRE projects that little is being developed in the broader Jacksonville office market, which for the past two years has enjoyed healthy absorption. That's resulted in a lack of large blocks available for lease, which would bode well for the BofA Tower.

Indeed, Hertz had been in talks to lease about 120,000 sf to CSX Corp., whose corporate headquarters is five blocks away at 500-550 Water St. But those talks haven't materialized into a lease. The transportation giant earlier this year said it would be eliminating 1,000 jobs, including at its headquarters.

Last year, BofA Tower, which was constructed in 1972, generated $5.2 million of cash flow, according to servicer data compiled by Trepp LLC. That was up from $4.6 million in 2015 and $5 million in 2014.

Other tenants include law firm Smith, Gambrell & Russell LLP, with 19,026 sf through January 2026, law firm McGuireWoods LLP, with 19,018 sf through December 2022, and Merrill Lynch, with 18,669 sf through December.

The property, which is near the St. Johns River, includes a parking garage with 900 spaces.

Comments? E-mail Josh Mrozinski or call him at (267) 247-0112, Ext. 213.



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Additional Info

  • Syndicate to Realpoint: No
  • Cities: Jacksonville
  • States: Florida
  • Sector: Office
  • Subject: Property Offerings (OFF)
  • Deal Name: JPMorgan Chase Commercial Mortgage Securities Corp., 2014-FL6
  • Private: No
  • bloombergDealName: JPMCC 2014-FL6
Read 377 times Last modified on Monday, 17 April 2017

Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2016
Investment Bank #Deals Vol$mln MktShr%
JPMorgan Securities 14.94 10,350.16 15.14
Deutsche Bank 14.21 9,926.60 14.52
Wells Fargo Securities 13.36 9,513.96 13.92
Citigroup 10.87 8,061.79 11.80
Goldman Sachs 10.05 7,563.72 11.07

 

MOODY'S/RCA CPPI

 

cppichart FP

 

 

CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2016
Lender #Loans Vol$mln MktShr%
JPMorgan Chase Bank 133.67 8,670.33 13.34
Goldman Sachs 156.20 7,418.37 11.41
Deutsche Bank 178.17 6,510.75 10.02
Citigroup 184.41 5,512.20 8.48
Morgan Stanley 113.18 4,130.53 6.35

 

 

 

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