INDIANAPOLIS-N. Meridian LLC, a TIC vehicle created by ANYI Management Co., has acquired a $41.3 million loan for the 500 N. Meridian office complex here, in anticipation that its only tenant may vacate soon. The proceeds refinanced current debt and provide funds for future leasing at the 436,187 sf office building.
The complex is 100% leased to American States Insurance Co., a division of Safeco Business Insurance. The company's lease end is coming up, and that's causing mixed results for the property owners, says Don Trossman, managing director of Cohen Financial's Chicago office. He represented the borrower.
He says because the lease is almost up (he wouldn't divulge the current rate or the end date for the 20-year term), the rate is at its highest point, and provides a significant cash flow for the owners. However, the tenant can exercise six five-year renewal options that will provide much lower rent, about 30% lower than the average market rent of $17, triple net, Trossman tells GlobeSt.com. "If that does happen, a portion of the cash will be returned to the borrower and will reduce their equity significantly. Their return will be enhanced," he says.
The insurance company also has the option to buy the building, but Trossman says he doubts that will happen. The building was originally owned by Lincoln National Insurance, which was bought by Safeco. "Now Safeco has subleased the property out to a couple different entities, so no one's really sure what they are going to do," Trossman says.
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