The first four properties listed were 88.7% occupied as of May 31, 2008; 2100 Franklin is a 213,000-sf, $78.5-million ground-up development that was shell completed in October and is currently vacant, according to SEC filings. The deal also includes for the buyer Brandywine's condominium interest in a parking garage at 2353 Webster Street, an option for the CIM Group affiliate to acquire an additional asset. Bradywine in exchange will retain the right to manage and lease the property for at least one year.
The affiliate of Los Angeles-based CIM Group has put up a non-refundable deposit; the sale is expected to close in the third quarter. Per the agreement, $40 million of the $316.9 million to be paid in cash will be carried back by Brandywine as a two-year interest-free loan secured by 2100 Franklin and 2101 Webster. The non-cash part of the deal includes three existing mortgage loans totaling approximately $95.6 million that will be assumed by the buyer.
As previously mentioned, Brandywine also has agreed to grant the buyer a 15-year purchase option for a land parcel adjacent to The Ordway that can support 650,000 sf of development, and has committed to lease to the buyer 150 parking spaces on that same parcel for the benefit of Ordway's tenants. The land is slated for Two Kaiser Plaza, an office building.
Assuming approximately $7 million in transaction costs and an August 31closing, Brandywine expects to realize approximately $269.9 million of cash proceeds at the closing, and an additional $40.0 million of cash proceeds on August 2, 2010 upon repayment of the loan. The proceeds of the sale will be used for the repayment of existing debt and to provide cash balances for general corporate purposes.
"The sale proceeds will strengthen our balance sheet, reduce our overall and secured leverage and provide additional capital availability for our ongoing investment activities," Brandywine president/CEO Jerry Sweeney says in a prepared statement. "Recycling capital from non-core assets to our target markets remains an integral part of our overall funding strategy."
Post sale, Brandywine's Bay Area portfolio will include office properties totaling 554,534 sf, two land parcels and several third-party leasing and property management contracts. Nationwide, the company's portfolio will total approximately 23 million sf in 232 properties, including 22 industrial facilities and not including seven properties totaling 3.6 million sf that are under development.
Lazard Frères & Co. acted as financial advisor to Brandywine in this transaction. The company also engaged CBRE to assist in the portfolio's marketing efforts.
Two of the loans the buyer will be assuming are secured by 1333 Broadway and the Ordway. The loan on 1333 Broadway totals $23.88 million, matures in May 2010, according to SEC filings. It carries a stated interest rate of 5.175% and an effective rate of 5.54%. The Ordway loan totals $45.32 million and matured in August 2010. It carries a stated interest rate of 7.95% and an effective rate of 5.29%. Details of the third loan were not immediately available.
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