$209M Portfolio Lands 1031 Buyer

LONG ISLAND, NY-Locally based Lighthouse Real Estate Ventures Inc. closes on its purchased of a Northeast portfolio, as part of a 1031 exchange requirement, for $209 million. The portfolio, which consists of 25 warehouse/flex assets and nearly two million sf, was sold by Pleasantville-based Baker Properties.

The geographically diverse portfolio, which was approximately 93% leased at the time of sale, consists of five properties in a corporate campus setting in Morris Plains, NJ, 10 properties located in corporate parks in Elmsford and Port Chester in Westchester County, NY, and 10 properties in Fairfield and New Haven Counties, CT, including five properties in a Interstate 95 corporate campus in Orange, CT. The portfolio also allows for development potential at two-acre and five-acre (plus or minus) sites in Connecticut.

Baker Portfolio

Jeffrey Dunne, Steven Bardsley, Jeffrey Oram and David Gavin of CB Richard Ellis’ New York Institutional Group collaborated with William Cuddy and Sean Cahill of CBRE’s Stamford office, Matthew O’Hare of the New Haven office and Tom Mallaney of the Saddle Brook, NJ office negotiated the sale and was responsible for procuring the buyer.

The 104,000-sf 60 Marsh Hill Rd., Orange, CT asset was pulled from the original 26-asset portfolio. It has 29% office, 71% industrial, is 100% occupied and will be sold for $11 million to the Southern Connecticut Gas Co., who exercised their first right of refusal purchase option, according to a CBRE release. With this sale included, the 26-assets will trade for $220 million.

Baker Portfolio

The properties’ central locations in each of their respective markets have attracted investment grade tenants, creating stable in-place income and significant upside potential from both below market lease expirations and additional land for future development, according to a CBRE prepared statement. Dunne explains that “the Baker Portfolio provided Lighthouse with a compelling investment opportunity to acquire a proven, critical mass of best-in-class assets as part of the second-leg of a 1031 exchange requirement.” Dunne continues that Lighthouse’s exchange requirement was driven by their $180-million sale of 100 William St. in New York City in late December 2007.

Marc Baker, president of Baker Properties notes that “this transaction is the culmination of over 30 years of asset accumulation in excellent locations, and we look forward to using this opportunity to reposition our portfolio for further growth and value creation.”

M. Robert Goldman & Co. Inc. arranged $105 million in financing for the acquisition. Jonathan Goldman, EVP, and John Robustello, VP, arranged the financing through MRG’s correspondent relationship with John Hancock Life Insurance Co. “Spreads on all classes of debt are at historic highs,” Goldman says. “Certainty of execution was paramount as the subject was part of a larger 1031 transaction. The size of the deal also presented numerous challenges as many of the traditional players including investment banks and insurance companies are either out of the market or have dramatically reduced their whole loan allocations. John Hancock stayed true to course, held their rate lock as spreads widened, and marshaled the resources necessary to close the loan within the necessary time frame.”