Finance  ·  CMBS

Wells Fargo Headlines $103M CMBS Debt Package for North Jersey Office Building


Brooklyn-based Galil Management has scored a $103 million CMBS financing package to fund its acquisition of Park 80 West, an office complex 10 miles northwest of Manhattan in Saddle Brook, N.J., according to Fitch Ratings.

The debt, which is to be securitized into the forthcoming BANK 2018-BNK14 commercial mortgage-backed securities transaction, includes a $75.5 senior loan from Wells Fargo that supported provided the majority of the capital for Galil’s $115.5 million acquisition of the 500,000-square-foot property. The seller was a fund affiliated with CBRE that bought the building in early 2015 for an undisclosed sum.

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Galil, led by Leibel Lederman, also reeled in $27.6 million in mezzanine and junior financing: a $17.6 million mezzanine piece from an unidentified source, and a $10 million unsecured junior loan from Cimbar Investments.

Meridian Capital Group‘s Abe Hirsch and Matt Texler arranged the financing.

The 10-year fixed-rate Wells Fargo loan earns 4.83 percent interest, with no principal payments until maturity in September 2028. The senior loan balance implies a 65.2 percent loan-to-value ratio, while the lion’s share of the debt thins to LTV to nearly 90 percent.

Park 80 West, at 250 Pehle Avenue in the North Jersey suburb, includes two buildings connected by a walkway, a plaza and parking garages, according to Fitch, which evaluated the forthcoming CMBS deal. The biggest tenants are Rising Pharmaceuticals, New York Life and CBRE, which together take up about a fifth of the complex’s floor space. None of their leases expires within the next five years. Workers at the building get access to a cafeteria and a gym.

During CBRE’s ownership, the real estate company hired architecture firm Gensler to modernize the buildings’ interiors and design a shared lobby for the complex, according to Gensler’s website.

The building earned $11.6 million against expenses of $5.7 million in 2017, which yielded cash flow about 8 percent stronger than the year prior.

Halfway through 2018, occupancy stood at 91 percent, up from 78 percent in 2015. But office vacancies in the property’s submarket, centered around the nearby towns of Hackensack and Teaneck, remain stubbornly elevated. Almost a fifth of the area’s office space is untenanted, according to real estate data provider Reis.

Representatives from Galil and Wells Fargo did not immediately respond to inquiries.