Starwood Property Trust has provided a $157m loan to Brookwood Financial Partners for the acquisition of a 29-building office portfolio in the suburbs of Philadelphia, Pennsylvania, Real Estate Capital has learned.
The two-year, floating rate bridge loan — with extension options and a 70% loan-to-value — backs 1.6m sq ft of Class A and B properties in the Bucks County, Fort Washington, Horsham and Lehigh Valley submarkets. Charles Foschini, Lourdes Carranza-Alvarez, and Christian Lee with CBRE Capital Markets’ Debt & Structured Finance division arranged the financing.
Brookwood plans to pump about $7.6m worth of capital improvements into the value-add properties, taking advantage of recovering fundamentals across US suburbs that are marked by positive absorption and projected rental rate increases.
The Greater Philadelphia market in particular has experienced positive absorption in 14 of the last 18 quarters and vacancy rates are projected to decrease by 10.2% to 11.4% from the first quarter of this year through 2017, according to CBRE.
The portfolio includes 23 office buildings and six office/flex buildings ranging in size between 17,750 and 132,385 sq ft, with occupancy rates between 80.6% and 88.3%. The sub-portfolios consist of three buildings in the Bucks County submarket totaling 167,280 sq ft; six in Fort Washington totaling 457,913 sq ft; nine in Horsham totaling 318,137 sq ft; and 11 in Lehigh Valley totaling 668,631 sq ft.
Renovations will include improvements to building lobbies, common areas and restrooms, upgraded landscaping, refreshed building exteriors and entrances, new roofs and elevator upgrades. Brookwood also plans to build out speculative suites.
With the acquisition, Brookwood now owns and manages 110 buildings throughout the US, consisting of more than 8.5m sq ft in 10 states, valued in excess of $1.2bn.