MILWAUKEE—Broe Real Estate Group, a Denver-based investor, has launched a $100 million program to recapitalize properties across the US that need additional capital for refinancing, capital expenditures, leasing costs and legal fees, among other costs. Its first recap is the One Riverwood Place and Two Riverwood Place offices here in suburban Pewaukee.
Called Equity Solutions, the program will provide capital to Tenant-in-Common investors and other capital-constrained partnerships. Many TICs soured during the economic downturn due to the high prices paid for the properties during the height of the real estate cycle, high fees charged by TIC sponsors and a lack of funds to cover leasing costs and needed capital expenditures, Broe officials say.
“We currently have a significant pipeline of recap opportunities,” Jim Crawford, vice president – acquisitions for Broe, tells GlobeSt.com. “We're targeting major and secondary markets and will consider both class A and B properties. The Equity Solutions program is not specific to office as Broe will consider most commercial property types.”
The two Pewaukee buildings, which were constructed in 1999 and 2001, and total 197,000 square feet of class A space, are now 72% leased. The property was originally acquired by a TIC group of investors in 2007 for $36.5 million. As part of the transaction, a Broe affiliate will assume a $26.5 million dollar CMBS loan, and Broe will take over management duties and fund all future capital improvements and leasing costs.
“It's a great property in a strong suburban market,” Crawford adds. “The transaction also represents the first of many recapitalizations Broe plans to close in 2015.”
The Riverwood TIC members were represented by National Asset Services, a Los Angeles-based manager. The company will continue to work with the investors and support Broe in the management of the property.
The Broe team helps “get the TIC investors out of a difficult situation in a fair and non-predatory manner,” says Karen E. Kennedy, president of NAS. “Broe not only brings capital but also years of experience and know-how that will help turn around the property.”
Broe hired NAI MLG Commercial in Milwaukee to be the property manager and leasing broker. Tim Janusz and Rachel Schmidt, both senior vice presidents at MLG, head the leasing team.
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