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TRENTON-In a deal brokered by Jones Lang LaSalle, Brandywine Realty Trust has shed two office buildings here for $85 million. The unnamed private investment group secured $45.5 million through an undisclosed national bank to complete the deal.

“A transaction of this magnitude is proof that deals structured the right way can secure a large sum of third-party financing despite the challenging market,” says JLL managing director Thomas Beneville, in a statement. He, along with JLL managing director Ron Cariola and vice president Michael Carpenter, represented Brandywine in the sale.

The two properties at 33 W. State St. and 50 E. State St. span 473,658 square feet and are currently 96.5% leased. The State of New Jersey recently signed 15-year leases for most of the space in the buildings, which are located in Downtown Trenton near the Capital Complex. An affiliate of Brandywine will manage and lease the two properties for a seven-year period following the closing.

According to a release from Brandywine, a Radnor, PA-based REIT, $22.5 million–of the $85-million sales price due at the closing–has been deferred by the company as a seven-year, 6% cash-pay/7.64% per-million first mortgage the buyer obtained for the purchase. Most of the gain Brandywine will recognize on the sale will be deferred under the installment method of accounting until the repayment of the second mortgage loan.

Upon closing, Brandywine realized approximately $62.5 million of cash proceeds, and will book approximately $27.8 million of additional cash proceeds on Sept. 30, 2017 upon repayment of the second mortgage inclusive of the estimated accrual. Under certain circumstances, the loan may be extended for an additional three years. The initial proceeds of the sale will provide cash balances for general corporate purposes including the repayment of existing indebtedness.

“We are pleased to achieve the sale of these assets in a challenging market,” states Jerry Sweeney, president and CEO of Brandywine, in a statement. “The sale proceeds strengthen our balance sheet, reduce leverage and provide additional capital for our investment activities. Recycling capital from non-core assets such as these two properties remains an integral part of our overall strategy.”

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