One loan sale said to be under way involves the note on the North Andover Mills in North Andover, which is currently owned by Yale Properties.
In one of the more encouraging deals circulating in the Hub’s commercial real estate debt market, GE Capital Corp. is acquiring a loan package backing four Massachusetts properties, according to industry sources. By some accounts, the transaction with MetLife may actually exceed the face value of the notes, including one estimate pegging the agreement at slightly more than $90 million.
“They are the winning bidder,” claimed one source, adding that there were upward of 20 suitors for the portfolio. The properties include 100 Danton Drive in Methuen, 600 and 880 Technology Park Drive in Billerica and a 100,000-square-foot asset in the Westwood Office Park. Equity Industrial Partners owns the Methuen building, while the Gutierrez Cos. of Burlington developed the Billerica structures.
Another significant loan sale is said to be under way as well, in which the note on the North Andover Mills in North Andover is reportedly being shopped about by its lender, although that deal is expected to trade at a discount given the property’s recent struggles.
One source maintained that the loan buyer could move to take control of the 14-building complex from owner Yale Properties, very possibly through the “deed-in-lieu-of-foreclosure” strategy increasingly evident throughout the region. The $15.9 million loan covers the east campus of the North Andover complex, with the other half of the property being sold this summer to an Indiana investor for $58 million, a high-profile deal negotiated by Trammell Crow Co.
Yale also has tried to peddle the east campus simultaneously, but split the sale upon receiving a tepid response for that portion. The piece that traded this summer is occupied on a long-term basis to a solid-credit tenant, but the east campus has a vacancy rate approaching 50 percent. Despite its difficulties, the North Andover Mills could be a prudent investment at the correct price, according to one observer familiar with the development, perhaps offering an opportunity to convert the building from office and industrial into residential, a move certainly sweeping the Bay State. “It’s a gorgeous mill [complex] on a great site,” insisted the source.
Totaling 234,000 square feet of space and located on an 18.8-acre parcel that includes a 630-space parking garage, the east campus is likely to find a buyer for its note well below replacement cost, sources predicted, and some said they believe developers will be among those pursuing the opportunity. A similar strategy is under way in downtown Boston, where the loan for 185 Devonshire St. was recently purchased in a plan to acquire the real estate by a Miami-based investment firm.
Performing Loans
NAI Hunneman Commercial Corp. reportedly has been hired to sell the North Andover Mills note for the lender. Vice President Mark Hall declined comment on the matter when contacted by Banker & Tradesman last week, but sources claimed the firm has already begun marketing the loan. In one of the area’s more high-profile note sales this year, Hall traded the $22.5 million debt on 51 Sleeper St. in Boston’s Fort Point Channel, an asset owned by Los Angeles Dodgers owner Frank McCourt. That loan was acquired for approximately $17 million by the Mayo Group, which then moved to control the property and has since successfully leased a major portion of the 150,000-square-foot office building to The United Way.
Unlike the North Andover offering, the loans in the MetLife package are all said to be performing, leading to the apparently strong pricing generated in the bidding campaign. Paying over par is hardly unheard of, and the loans all support ostensibly stable real estate, with even the empty 291,000-square-foot warehouse in Methuen still leased on a long-term basis to supermarket behemoth Alberstons. An extended sublease to Nortel Networks also offers stability to the 880 Technology Park Drive building to 2015, while 600 Technology Park Drive has several solid credit tenants on board as well. The Westwood asset is located at 400 Blue Hill Drive. It is unclear what the occupancy rate in that property is, but one observer called it “well regarded” in the marketplace.
Calls to GE Capital, MetLife and Secured Capital officials to discuss the portfolio sale were not returned by press deadline, while Equity Industrial Partners and the other owner/developers impacted also were unavailable for comment. Gutierrez reportedly bought back a note on a Burlington office property back at a discount, but one observer said the difference there was that the loan was non-performing at the time. As evidenced in the sale price, competition was expected to be greater for the Billerica loans, and sources could not say whether Gutierrez was among the bidders for the MetLife package.
