"We also assisted the borrower with the defeasance by structuring a custom debt security through Fannie Mae," says Crimmins, who notes that the 85% loan-to-value financing has a 10-year term and is interest-only for the first five years. "That saved the borrower more than $300,000 on the cost of the defeasance."
Two Gateway, 18 stories and about 780,000 sf, is part of the four-building Gateway office complex adjacent to Newark Penn Station. Its major tenants are Prudential, the Port Authority of NY/NJ, the State of New Jersey, Wachovia and the US government. It is currently 99.6% leased, with only a 3,100-sf block of space available.
C&K, headed by partners Ben Korman and Meir Cohen, bought the class A asset in early 2006 from American Landmark Properties for a sale price variously reported as between $156 million and $165 million, or about $200 per sf. As part of the sale transaction, according to Crimmins, C&K assumed existing debt held by Capmark and the latter provided a forward rate lock; enabling C&K to take advantage of January's lower interest rate when the loan became eligible for defeasance in August.
The asset's market value, meanwhile, has steadily trended upwards over the past several years. The Skokie, IL-based American Landmark Properties had the building for five years after buying it in 2001 for $110 million. Two Gateway had earlier changed hands in 1998, selling for $78 million.
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