A New York Debt Fund Sees Value in Rockville's Office Market

Park Plaza I and II

ROCKVILLE, MD—Last June Marcus Capital Partners announced it acquired Park Plaza II through its most recent fund, Marcus Capital Partners Fund II, LP. Shortly after, it acquired the sister building, Park Plaza I.  Now the Boston-based company has secured financing for the purchase and capital improvement and leasing efforts of these two buildings via a New York-based debt fund, PCCP. The amount provided, $34.13 million, is not all the much in the grand scheme of such things. But the fact that PCCP was interested in this asset is telling — given Maryland’s underdog status — about debt funds’ appetite for deals. The loan PCCP provided for Park Plaza I and II also covers funding for the recapitalization of the property, as well as capital for tenant improvements and leasing costs, according to John Randall, managing director with PCCP. One attribute about the buildings that PCCP singled out was Park Plaza II’s distinction of having the only  available contiguous block of class A office space topping 100,000 square feet in this submarket. The downside — or rather, value add strategic plan? The 126,956-square foot building, which was developed in 2001, is  currently only 16% leased. Leased up to the right tenants, it could be a cash cow if and when suburban Maryland’s market improves. Other Debt Funds Like Maryland It is not just PCCP that is active here. Executive Managing Director John Campanella of Cushman & Wakefield, who arranged the financing on behalf of Marcus Partners, noted that there is strong interest in general from lenders for assets in Maryland submarkets. “Park Plaza attracted a number of banks and debt funds interested in financing a non-recourse, value-add transaction,” he said in a prepared statement. Park Plaza I was developed in 1991 and totals 137,329 square feet. It is currently 80% leased to 13 tenants, the largest of which are Northrop Grumman and Monument Bank. Over the past three years, $2.8 million in capital improvements has been invested in the property including an updated lobby, renovated bathrooms, and a state of the art fitness center. Now capital Improvements are underway on Plaza II. The previous tenant build-outs on three floors are in the process of being demolished and prep work is being done on the vacant suites for marketing tours. The plan is to reposition the building as a value play for tenants “seeking high‐quality, recently renovated, well‐located space,” Randall said. There has already been a strong amount of tenant interest in the property and leases are expected to be signed over the coming months, he added. The properties are  located at 2099 and 2101 Gaither Rd.