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Middle Market Digest – The Northeast

Here is a roundup of the latest leases, sales and other transactions in the Northeast middle markets.

This week by the numbers

Morningstar Credit Ratings says about $3.6 billion in CMBS debt could be affected by the Toys ‘R’ Us bankruptcy, but many of the properties being used as collateral for mortgage-backed bonds are “in strong markets and conservatively underwritten.” Morningstar says even if Toys ‘R’ Us terminates leases, the default risk is low. “The $507.6 million single loan securitized in the TRU 2016-TOYS deal is the largest exposure to the retailer,” Morningstar says in a report on the toy stor chain. “Because the loan is backed by 123 Toys ‘R’ Us and Babies ’R’ Us stores combined, geographic diversity mitigates default risk.”

Morningstar Credit Ratings says that of the 226 CMBS loans backed by collateral where Toys ‘R’ Us is one of the five largest tenants, eight loans totaling $150.7 million already are in special servicing, and the rating agency says combined losses on those loans could be more than $67 million or more.

Deal Tracker Daily

NEW YORK, NY—Holliday Fenoglio Fowler arranged the $19 million sale and $9 million in financing for The Atlantic Stamp Building, an eight-story, 26-unit boutique residential property in Brooklyn, New York. HFF’s managing directors Jeff Julien and Rob Hinckley, and director Steven Rutman represented the seller, an affiliate of Zurich North America (advised by Zurich Alternative Asset Management), and procured the buyer, Twining Properties.  Zurich’s in-house team, including Chris Edgar, director of Multifamily Acquisitions and Sean Bannon, managing director and head of US Real Estate, represented Zurich in the disposition.  Twining Properties acquired the property on behalf of one of its clients.  Twining’s acquisition efforts were led internally by Ed Rotter and Brian Hong. Also working for the buyer, HFF’s debt placement team, which included senior director Geoff Goldstein and director Rory Shepard, secured an acquisition loan through Principal Global Investors.

NEW YORK, NY—Shake Shack has signed a 27,000-square-foot lease for a new flagship restaurant, state-of-the-art test kitchen and home office at Trinity Hudson Holdings’ 225 Varick Street where Hudson Square meets the West Village. The deal was announced by operating partner Hines on behalf of a joint venture led by Trinity Real Estate. Paul Amrich, Howard Fiddle, Patrice Meagher, and Zakery Snider of CBRE represented ownership and the tenant was represented by Mark Weiss of Cushman & Wakefield. The lease includes 3,000 square feet of prime retail space—where Shake Shack will open a flagship restaurant and test kitchen in a highly visible, West Village location facing Seventh Avenue at Varick Street—and 24,000 square feet of office space where Shake Shack will relocate its home office from Union Square, both slated for early 2018.

NORTHBOROUGH, MA—Scott R. Hughes, president, and Ted H. Reimann, vice president, of New Dover Associates of Framingham, MA, represented Vector Northborough Commercial Condominiums and Apogee Realty of Northborough, in the sale of Units 21-28 at 104 Otis Street, Northborough, MA, for $1.885 million, and procured the buyer, KJG Otis Street. Units 21-28 at 104 Otis Street total 27,185 square feet of office, warehouse and light manufacturing space. 104 Otis Street is one of three buildings located in the Gainsboro Industrial Park.

NEW YORK, NY—Cushman & Wakefield arranged the sale of 751 Myrtle Avenue, a warehouse site in Brooklyn, NY. The final closing price was $6.5 million, or approximately $433 per existing square foot, with a 3.5 percent capitalization rate on existing income. Cushman & Wakefield’s DJ Johnston, Bryan Kirk, William Cheng, Joshua Sabzevari, and George Bukawyn represented the seller in the transaction. The single-story warehouse consists of three commercial units and totals 15,775 square feet. The space is currently leased to a tile business and auto repair shop.

NEW YORK, NY—Ariel Property Advisors facilitated the sale of 91-95 Diamond Street, a development site/residential building assemblage located in the Greenpoint section of Brooklyn. The property grouping sold for $5.855 million, or $390 per buildable square foot. The development site at 91-93 Diamond Street and two-family home at 95 Diamond Street, which together include frontage of 75 feet, were delivered vacant. Exclusive agents Daniel Tropp, Michael A. Tortorici and Jonathan Berman represented the seller and procured the buyer.

BRONX, NY—Marcus & Millichap arranged the $4.96 million sale of 2886 Briggs Avenue, a 31-unit apartment property located in Bronx, according to John Krueger, regional manager of the firm’s Manhattan office. Marco Lala, Jack Lala and David Raciti of Marcus & Millichap’s Manhattan office, had the exclusive listing to market the property on behalf of the seller, a private trust, and identified the buyer, a limited liability company that was not identified.

WATERTOWN, MA—Calare Properties sold 20 Seyon Street in Watertown, MA for $15 million, with the 94,268 square-foot property fully leased through January 2024. Calare purchased the warehouse distribution facility, located on five acres, in 2015, with a strategic plan to increase asset value through capital improvements and lease extensions.  The property is near Interstates 90 and 95 within a thriving mixed-use corridor home to national retailers and several Class A apartment and condominium communities.

RIDGEFIELD, NJ—The Pfister Site on Route 46, at 18.73 acres one of Bergen County’s largest remaining development parcels, is finalizing its environmental remediation program and is being offered for sale, according to Dr. James Bendelius, president of Pfister Chemical. Bordering the eastern shore of Overpeck Creek, the property was home to the Pfister Chemical factory from the 1930s through the 1990s. Newmark Knight Frank will market the property.  The site’s 17 current “as-of-right uses,” including industrial, warehouse, retail, office and a variety of public space uses, were prospectively expanded recently when the Borough of Ridgefield declared it an “area in need of redevelopment.”

ROSELLE, NJ—The PARK residential community recently opened a 9000-square foot club house for the community, 417 Raritan Road, at the former Roselle Golf Club in Roselle, and its first phase of 190 units is already 52 percent leased just four months after its leasing office opened.  When completed, the PARK will offer 932 luxury apartment units.

Money Moves

PITTSBURGH, PA—Holliday Fenoglio Fowler arranged $127.5 million in financing for Nova Place (interior pictured, right) and 106 Isabella, a 1.3-million-square-foot office complex and nearby office building in Pittsburgh, PA. The HFF team of executive managing director Gerard Sansosti and senior managing director Nick Matt worked on behalf of the borrower, Faros Properties, to secure the five-year, floating-rate loan through Wells Fargo. Nova Place, a former urban mall that was converted into office use in the early 1990’s, comprises three office complexes totaling 1,250,702 square feet – Concourse, Tower 1 and Tower 2 – and a 3,000-space parking garage.  The property is 86 percent leased to tenants.

PARSIPPANY, NJ—Newmark Knight Frank’s tri-state capital markets team has been exclusively retained by owners Intercontinental Real Estate Corporation and Ivy Realty to serve as advisors for the sale of Morris Corporate Center IV, 369-379 Interpace Parkway, Parsippany, NJ. MCC IV includes two, five-story trophy office buildings totaling 359,671 square feet. The buildings are connected by a signature, four-story glass atrium lobby and the property is considered one of Morris County’s premier office assets. NKF executive managing director Kevin Welsh, managing director Brian Schulz, and executive managing director Steven Schultz will be marketing the asset, with vice chairman Jordy Roeschlaub providing financing options. NKF vice chairman and COO of New Jersey David Simson will lead the sale process to corporate buyers and provide market expertise and leasing guidance to investors.


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