NorthMarq Arranges $157M Loan for Bay Area Office Project

Borrowers Bohannon Development Co. and Alexandria Real Estate Equities will use the financing to develop the 521,000-square-foot Phase II of Menlo Gateway, which will be occupied by Facebook.
Menlo Gateway Phase II, Menlo Park, Calif
Menlo Gateway Phase II, Menlo Park, Calif

Thanks to NorthMarq Capital, Bohannon Development Co. and Alexandria Real Estate Equities are now in possession of financing for Phase II of Menlo Gateway, a 16-acre master-planned development in Menlo Park, Calif., in the San Francisco Bay Area. NorthMarq arranged a $157.3 million construction-to-permanent loan for the project, which will yield an additional 521,000 square feet of office space for Facebook. The social media giant has leased Menlo Gateway’s entire 773,000-square-foot office component.

Phase II of Menlo Gateway consists of 125 and 135 Constitution Drive, two of the three Heller Manus Architects-designed office towers planned for the campus. NorthMarq secured the fixed-rate financing for the development through a life insurance company. The loan features a three-year interest-only term that will convert to a 14-year term upon completion of construction. NorthMarq welcomed a great deal of attention from the lending community for the project.

“There was significant interest in this opportunity by life insurance companies, banks, debt funds, and CTL lenders with construction or construction-perm programs given the long-term lease to Facebook, the strong ownership profile, and the property’s location in a top-tier market,” Briana Harney, senior investment analyst with NorthMarq Capital, told Commercial Property Executive. “Ultimately, the selected lender was able to offer a customized solution which matched the borrower’s needs.” Harney and John Kerslake, senior vice president & managing director with NorthMarq Capital, arranged the financing on behalf of the borrower.

Menlo Gateway, Menlo Park, Calif.
Menlo Gateway, Menlo Park, Calif.

Ground broke on Menlo Gateway in 2016, kicking off the transformation of what had been an industrial park into a mixed-use destination at the gateway to Silicon Valley. The first office building, an eight-story office structure encompassing 252,000 square feet at 100 Independence Drive, has already reached completion, as has the 250-key Autograph Collection hotel, which was part of Phase I. Phase II is on schedule to reach completion in the fourth quarter of 2019.

Repeat business

NorthMarq is no stranger to Menlo Gateway; the commercial real estate financial intermediary orchestrated financing for the development on a previous occasion. In March 2017, NorthMarq arranged a $145 million construction loan through Square Mile Capital for the campus’s first office building, as well as a 40,000-square-foot fitness center to be operated by Bay Club and a 1,000-space parking garage, one of three that will ultimately stand at the site.

Image courtesy of Bohannon Development Co.