SOMERSET, NJ-Gramercy Capital Corp. has closed on its second credit tenant lease investment with the acquisition of a 100% fee interest in 200 Franklin Square Dr. in this Somerset County community. The property was acquired for a purchase price of $50.2 million, with the deal financed with a $41-million, 10-year, fixed-rate first mortgage, according to company officials. The financing came from Nomura Credit and Capital Inc. "This acquisition is part of our commitment to expand our net lease investment business," says Andrew Mathias chief investment officer of the New York City-based Gramercy. His firm is a real estate specialty finance company that focuses in the direct origination and acquisition of first mortgage loans, subordinate mortgage participations, mezz loans, preferred equity and net lease investments.
"We feel it will generate stable, long-term rental income as well as the potential for residual real estate value," Mathias continues. The asset is a 200,000-sf class A office building fully occupied by Philips Lighting Co. It was built in 1986 to serve as the North American headquarters of Royal Philips Electronics of the Netherlands, and currently houses 400 of the company's staffers.
The building is 100% net leased through the end of December 2021 to Philips Holding USA Inc., a wholly owned subsidiary of Royal Philips Electronics. The lease is guaranteed by Koninklijke Phillips Electronics NV which, according to company officials is rated A- by Standard and Poor's, Baa1 by Moody's Investors Services and BBB+ by Fitch Ratings.
"This purchase demonstrates the advantages that can be gained by using our relationship network to source negotiated investment opportunities," Mathias says of the transaction, for which Eastdil Realty served as an advisor. Gramercy is externally managed by GKK Manager LLC, a majority-owned subsidiary of SL Green Realty Corp. Besides its New York City headquarters, the company recently expanded its reach with a new branch office in Los Angeles.
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