CBRE Capital Markets arranged a $136.5 million loan from Wells Fargo to fund Oak Street Real Estate Capital’s acquisition of five MetLife office buildings totaling 1.3 million square feet, Commercial Observer has learned.
The five-year, interest-only loan, which closed on Dec. 28, 2015, carries two one-year extension options. The floating interest rate on the financing was fixed via a swap at the time of closing.
“We are very pleased to start a relationship with MetLife,” Marc Zahr, a managing partner at Oak Street, told CO by phone. “Their real estate and credit is stellar, and their long-term commitment to occupy these locations and be our partner is something that we find valuable.”
The Chicago-based private equity real estate firm finalized a sale-leaseback with MetLife, purchasing the properties for roughly $210 million. As a result, the financing carries a 65 percent loan-to-cost ratio.
The portfolio is comprised of five different offices—of which MetLife is the sole tenant—located at 501 U.S. Highway 22 in Bridgewater, N.J.; 344 Madison Avenue in Morristown, N.J.; 5950 Airport Road in Oriskany, N.Y.; 9797 Springboro Pike in Dayton, Ohio; and 700 Quaker Lane in Warwick, R.I.
The insurance giant signed a 12-year triple net lease at the office properties, with 2 percent annual increases in rent.
“These properties are an excellent addition to our net lease portfolio, which is designed to create stable long-term cash flow backed by investment-grade corporate credits,” Jim Hennessey, managing partner and chief financial officer of Oak Street, said in prepared remarks provided to CO. “We believe our ability to execute complex transactions quickly provides tremendous value to our tenants and investors.”
CBRE Executive Vice President Peter Marino and Associate Elizabeth Arnold of the firm’s Downtown Chicago office and Executive Vice President Shawn Rosenthal and Senior Vice President Jason Gaccione of the firm’s Midtown Manhattan office worked on the deal.
“The financing was structured to provide Oak Street with a strong leveraged return with the flexibility to execute on their business plan going forward,” Mr. Marino said. “Oak Street’s ability to close on the acquisition of a complex portfolio in a compressed timeline over the holidays was extremely impressive.”
Representatives for Wells Fargo and MetLife declined to comment.