Meridian Arranges $142M in Financing for 2 MSF Detroit-Area Office Complex
- May 15, 2014
Meridian Capital Group L.L.C., of New York, has arranged a $142 million mortgage on behalf of 601 West Cos., also of New York, for the latter’s purchase of Southfield Town Center in Southfield, Mich., Meridian announced Tuesday.
The 10-year loan features three years of interest-only payments and was provided by a CMBS lender. The transaction was arranged by Meridian managing director Rael Gervis.
Southfield Town Center is a 2.1-million-square-foot property composed of five office towers and a retail pavilion and is 67 percent leased. It features more than 93,000 square feet of concourse space and amenities such as convenience retail, food services, a fitness facility and the Skyline Club, an executive dining club.
There is also an on-site hotel, the 388-room Westin Southfield, which has a restaurant, banquet facilities and a health club.
“Meridian leveraged its strong position with CMBS lenders to efficiently make a market for financing this unique asset and structure highly accretive long-term financing at 80 percent of the purchase price,” despite the occupancy rate, Gervis said in a release. “Meridian was able to get the lender comfortable with the transaction based on an acquisition price that is substantially below replacement cost, the iconic status of the asset and, most importantly, the strength and experience of the sponsorship.”
Neither Meridian nor 601 West responded to requests for interviews.
Crain’s Detroit Business reported that the $177.5 million sale closed on May 2 and that 601 West acquired the complex’s office towers, but not the 5000 Town Center residential tower or the hotel.
It also quoted 601 West principal Michael Silberberg as saying the buyer plans to spend between $40 million and $50 million on the property, focusing on the 3000 Tower Drive building, with the goal of turning the complex into an A-plus asset.
Finally, Crain’s noted that the previous owner, Blackstone Group L.P., had been in default on its $235 million mortgage, originated in 2004 by Greenwich Capital, and that the loan had been transferred to Wells Fargo Bank for special servicing.
A projected 2.1 percent growth in office jobs at Detroit’s automakers should drive vacancies down to 2008 levels and allow landlords to raise rents this year, according to a Marcus & Millichap report. With the city’s finances somewhat more resolved, the report adds, “the region is being viewed by many investors as a rising market.”
In March, Commercial Property Executive reported that Meridian had arranged $200 million in acquisition financing for the mixed-use commercial building at 530 Broadway in New York, on behalf of a venture led by Jeff Sutton’s Wharton Properties.