REIT Sells NJ Office Buildings for $85m
Brandywine Realty Trust (BDN), a Radnor, Pa.-based real estate investment trust (REIT) sold two Trenton, NJ office towers to an undisclosed private investment group for $85m. The deal comes at a time when the commercial mortgage sector is experiencing its own credit crisis. The two combined facilities have approximately 474,000 square feet of rental space and were 96.5% occupied on Sept. 30, Brandywine said in a release. The REIT said $22.5m of the deal’s $85m was deferred by Brandywine as a seven-year, 6% cash-pay/7.64% accrual second mortgage loan provided to the buyer. The loan is secured by the two properties and is subordinate to the $45.5m first mortgage used to help finance the purchase, Brandywine said. “The sale proceeds strengthen our balance sheet, reduce leverage and provide additional capital for our investment activities. Recycling capital from non-core assets such as these two properties remains an integral part of our overall strategy,” said Jerry Sweeney, president and CEO of Brandywine Realty Trust. Brandywine received $62.5m in cash proceeds before transaction costs and expects to receive approximately $27.8m of additional cash proceeds on Sept. 30, 2017 when the second mortgage is paid off, inclusive of the estimated accrual. However, under the terms of the deal, the loan may be extended for an additional three years. Brandywine said it will use the initial proceeds from the sale to provide cash balances for general corporate purposes including the repayment of existing debt. An affiliate of the REIT will manage and lease the properties for seven years. Write to Austin Kilgore.