Madison Realty Capital (MRC) has provided a $15 million loan for the acquisition of a 12-story, 337,900 sq ft Class B office building at 440 Hamilton Avenue in White Plains, New York, Real Estate Capital has learned.
Josh Zegen, co-founder and managing principal of MRC, also revealed that a steady stream of deal flow in recent months puts his firm on track to originate $1 billion in loans in 2016, compared to last year’s $800 million total.
In a deal that’s representative of MRC’s strategic focus, the White Plains deal carries a transitional element, with the sponsor considering a conversion of the property for residential use or, alternatively, a renovation and lease-up as modern office product, Zegen said.
The sponsor is acquiring the property — situated on a 3.27-acre site — for $20.5 million from AT&T, the original builder and a current tenant; but all existing office tenants plan to vacate when their leases expire.
“We are in the deal at an attractive basis of just over $40 per sq ft, and at the same time were able to provide certainty of execution to facilitate this time-sensitive closing and help the sponsor lay the groundwork for its business plan,” Zegen said.
The investment was made out of Madison Realty Capital Fund III, a $695 million fund which includes the deployment of first mortgage loans, mezzanine loans, preferred equity, and the acquisition of non-performing loans.
Zegen noted that his firm has benefited from a lending pullback from banks, particularly on value-add transactions. But he also said his firm has continued to lend conservatively compared to some of its competition, leveraging its individual debt investments at a 50 percent loan-to-value (LTV) on average.
The New York-based firm is focused on real estate equity and debt investments in the middle markets. Founded in 2004, MRC has invested in approximately $5.2 billion of transactions in the multifamily, retail, office, industrial and hotel sectors.
As part of this investment program, MRC has sponsored four institutionally-backed debt investment vehicles with total commitments of $1 billion, which have closed more than $3 billion in debt transactions on behalf of corporate and public pension funds, sovereign wealth funds, university endowments, foundations, fund of funds and high net worth individuals.