Additional Lenders Revealed on $316M Loan for Amazon Logistics Facility in Queens
The massive project will serve as the largest amount of space leased to Amazon in New York and as the e-commerce giant's main hub for distribution to the Tri-State area
By Mack Burke and Cathy Cunningham December 10, 2020 10:41 amreprints
Five bank lenders are behind the $316 million construction loan for RXR Realty and LBA Logistics’ 1.1 million-square-foot logistics warehouse and distribution facility in Queens that’s reportedly pre-leased to Amazon, sources close to the deal told Commercial Observer.
News of the deal broke late last week, although JPMorgan Chase (JPM) was reported as the sole lender.
Sources told CO that both JPMorgan Chase and Bank of America (BAC) co-led the origination of the senior loan package, splitting roughly $90 million each, while Raymond James Bank, Emigrant Bank and CIT Group assumed approximately $60 million, $50 million and $30 million, respectively, sources said.
The financing will fund construction on RXR and Irvine, Calif.-based LBA’s Grand Logistics Center, a massive, multi-story distribution facility that will be located at 55-15 Grand Avenue in Maspeth, Queens. The five-story property comprises a Class A distribution facility with fleet storage capabilities for Amazon, and it will be a prime distribution hub with direct or approximate access to Long Island and four of New York’s five boroughs.
It will be Amazon’s largest lease in the city since the e-commerce giant’s scrapped HQ2 plans for Long Island City, Queens in 2019. The project is expected to be delivered in 2022, as per information from CoStar (CSGP) Group.
The transaction is a snapshot of the types of deals institutional bank lenders are willing to tackle in today’s climate — loans provided to institutional sponsors on strong, well-leased (or pre-leased) properties with credit tenants.
“With most of the major banks hitting pause during the pandemic, the construction loan market became challenging, but we were highly confident in the merits of the project despite the environment,” Michael Maturo, president of RXR Realty, said in a statement. “We were fortunate to identify a lead bank and have multiple participants to fill out the syndication on a large loan with optimal terms in this market.”
Maturo added that the amount of attention that the project received “is an indication of the strength of the site and the RXR [and] LBA sponsorship, as well as the quality of the tenant. It is a testament that the best-of-the-best projects are still achieving attractive capitalization structures.”
JLL (JLL) Capital Markets’ Kevin MacKenzie, Mike Tepedino and Brian Torp negotiated the debt, while JLL’s Robert Kossar and Leslie Lanne — from the firm’s agency leasing division — secured the Amazon lease.
While JLL would not name Amazon as the tenant in its announcement, and sources who spoke to CO declined to name a tenant due to confidentiality restrictions, Amazon was said to be negotiating for the space as recently as December of last year, as per a report from Crain’s New York Business. Several months later, in June of this year, Business Insider reported that Amazon had indeed signed on to take the space.
RXR and LBA first filed plans for the project in late 2018, which would see them start demolition on existing buildings on the site last year. They bought the three parcels that make up the site for $72 million at the start of 2018.
Grand Logistics Center will be positioned at the crossroads of the Brooklyn Queens Expressway and Long Island Expressway, two major thruways that act as conduits between the city’s respective boroughs. As such, the building’s location provides access to Manhattan and the outer borough markets, making the tenant’s last-mile delivery strategy to service the 7.9 million residents within the New York City metropolitan area possible.
“After exploring multiple capitalization structures with alternative financing sources, we were pleased with the outcome of obtaining a traditional construction loan of this size in an efficient process,” said Tom Rutherford, LBA’s principal of finance.
The industrial sector continues to be buoyed by COVID-19’s acceleration of the e-commerce trend, and — according to JLL research — Maspeth has only a 1.8 percent industrial property vacancy rate.
This story has been updated since publication to include more information about the amount of debt each lender assumed in the deal.