Hines JV Closes $182M Refi in Orange County

JLL Capital Markets orchestrated an interest-only loan through MetLife Investment Management for the Intersect office campus in Irvine, Calif.
Intersect. Image courtesy of JLL

Hines and its joint venture partner, a global investment management firm, have refinanced Intersect, a 450,000-square-foot office campus in Irvine, Calif. Acting on behalf of the partnership, JLL Capital Markets arranged a $182 million refinancing deal through MetLife Investment Management.

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The MetLife financing for the four-building Intersect property came in the form of a three-year, interest only loan. JLL’s Kevin MacKenzie, John Chun and Nick Lench concede in a press release that there were challenges in orchestrating the transaction in the midst of a pandemic; however, the team members cited strong relationships as one of the key elements to the successful closing. As JLL noted in a May 2020 report, “Despite ample liquidity in debt markets, lenders remain in a phase of ‘price discovery’ and are focused on asset managing their existing portfolios. This has led to a greater scrutiny over leverage, and an emphasis on experienced sponsors, resilient sectors and strong locations in quoting new deals. Intersect fits the bill.”

Located on a 15-acre site in Orange County’s coveted Airport submarket, Intersect is a creative office campus consisting of Class A buildings carrying the addresses of 17875 and 17877 Von Karman Ave. and 17872 and 17838 Gillette Ave. Hines came into possession of Intersect in 2015, when the company acquired the former Washington Mutual Campus, then known as Quintana, from Menlo Equities in a $121.5 million transaction. Soon after, Hines commenced a $25 million redevelopment program and in 2018, reintroduced Intersect as a next-generation office campus designed to support a balance of collaborative work and wellness. New features include indoor and outdoor workspaces and the list of notable amenities encompasses everything from a game pavilion and an outdoor yoga lawn to a shipping container, beer garden and a bird aviary.

Hines plans to utilize the majority of the proceeds from the loan to repay the balance of the $144 million New York Life Insurance loan that the same JLL team arranged in 2018 as executives of HFF before the merger with JLL. The remainder of the funds will be directed toward future leasing activity at Intersect, where the occupancy level skyrocketed from 13 percent at the time of the 2015 trade to a post-redevelopment level of 78 percent, 45 percent of which constitutes investment grade tenancies.

Not-so-shy lenders

JLL has orchestrated a bevy of notable financing deals during the pandemic, including a $185.6 million Freddie Mac refinancing package on behalf of Wealhouse Capital Management and Western Wealth Capital for a 1,439-unit multifamily portfolio in metropolitan Phoenix. And despite the coronavirus-spurred uncertainty, lenders haven’t shunned big-ticket transactions altogether. CommonWealth Partners and California Public Employees’ Retirement System recently obtained a $550 million CMBS loan—originated by Morgan Stanley and Goldman Sachs—for the refinancing of the $2.5 million-square-foot City National Plaza mixed-use office complex in Los Angeles.