Cassidy declined to specify the price paid for the property, which sits at 150 Morristown Rd. However, Jeffrey C. Clary, principal and associate general counsel for NPV Direct, tells GlobeSt.com that the property was sold for $5.9 million.
"We feel that we acquired it at a price point that was at a substantial discount to replacement value and allowed us to yield an IRR that would exceed our investment criteria," Cassidy says. Although he refrained from identifying the firm's return parameters, Cassidy says that "Something north of mid-teens is certainly what we are looking for today."
Denholtz is the lead investor in the deal and will manage the property in partnership with Becker Brothers LLC, a real estate investment company in Roseland. Denholtz, a private development, investment and management company, brought in other partners as well, although Cassidy declined to name them. Despite the challenge of working out the terms with the lender, he says investors were interesting in taking part in the deal.
"We were pleased by the equity response we received in subscribing this transaction," Cassidy confirms. "We were frankly unsure about the appetite for this type of product with our investment group. To our happy surprise they received this project very well."
The property is slightly over 50% occupied. One of its largest tenants, Pulte Homes, moved out about a year ago, according to Cassidy. "We see this property as a suburban office building that caters to professionals and mid-size firms," he details. "It offers flexibility, since it can be subdivided anywhere from 1,500 to 15,000 square feet."
A Q2 report from Cushman & Wakefield listed the direct average asking rental rate for Somerset County office properties at $24.62 per square foot. "Due to our acquisition price, we will be a very competitive in the marketplace," Cassidy says. The two-story building offers 24/7 access and executive covered parking. It is directly off of Route 202/206 and is close to Routes 78 and 287.
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