Morning Calm Refinances Atlanta Office Building With $59M Loan
By Cathy Cunningham September 5, 2023 6:30 am
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Office refinancings are rarer than hen’s teeth at the moment, but a recently closed transaction shows there’s capital out there for the right deals.
Case in point, The Atlantic Companies just sealed a $59 million loan from Morning Calm Office Finance (MCOF) to refinance its construction loan on 8West, a nine-story, Class A office asset in Midtown Atlanta, Commercial Observer can first report.
MCOF — a $500 million joint venture between Boca Raton, Fla.-based Morning Calm Management and an unnamed investment manager — launched in April with a goal to provide financing to office owners over the next two years as lenders retrench and the market segment faces an especially stark capital void.
As such, MCOF is both originating and purchasing senior and mezzanine loans as well as preferred equity investments — in the $25 million to $100 million range — on Class A office buildings in high-barrier markets.
“The profile of this transaction was pretty ideal, from our perspective,” Mukang Cho, founder and CEO of Morning Calm Management, said of his firm’s pull to 8West. “We’re focused on financing best-in-class assets in markets that we believe have more tailwinds than headwinds — and this ticked all those boxes.”
Atlanta’s West Midtown submarket has attracted a bevy of startups in recent years, as well as more established, big-name tenants, and the 193,000-square-foot building — at 889 Howell Mill Road — is in one of Atlanta’s most coveted business corridors, with proximity to the Georgia Institute of Technology campus as well as Atlanta University Center. In fact, 8West is within three miles of five universities and research centers.
With tech-savvy graduates conveniently close by, 8West now counts Ford Motor Company as one of its tenants, with the auto giant leasing 15,400 square feet of space in late 2022 for a research and innovation hub focused on software and technology development.
The building features views of the city’s skyline, while amenities include a rooftop deck, a fitness facility, a catering kitchen and an outdoor public plaza.
Eastdil Secured negotiated the financing, which also includes a mezzanine component. In fact, MCOF initially was approached as the mezzanine lender but ended up taking the senior spot.
Sponsorship matters more than ever today, and although this is Morning Calm’s first time transacting with Atlantic Companies, it likely won’t be the last, Cho said.
“They’re a prolific developer based in Atlanta, but their reach extends all over the Southeast, and they have a long-standing track record of performing,” he said. “We spent a lot of time with the team when we were down there touring the asset and were just really impressed.”
Morning Calm Management’s own experience as an owner of office properties — as well as other asset classes such as multifamily and industrial — uniquely positioned the firm for the launch of its office financing arm.
The launch took place in the thick of the CRE industry’s hour of need, as a wave of maturing office loans continue to find themselves with few options for refinance. Since then, the firm has, unsurprisingly, been receiving plenty of calls from interested borrowers and intermediaries.
“It’s a tough environment,” Cho said. “As a lot of folks know, we have a pretty sizable equity business as well and, luckily, we extended a couple loans that we had maturing this year. But not everyone has that same ability — whether it’s something specific to the sponsor, the lender or the asset itself, that option is not always available. We [at MCOF] can’t finance everybody, but we’re trying to do our part to finance as big a segment of the market as we can — where the opportunities make sense, of course.”
Cathy Cunningham can be reached at ccunningham@commercialobserver.com
