REI Refinances Indianapolis Office Tower

The 27-story downtown building landed a fixed-rate loan from Nationwide Real Estate Investments, with HFF spearheading efforts for the borrower.
300 North Meridian

REI Real Estate Services, which developed 300 North Meridian, a Class A Indianapolis office tower in 1987, has refinanced the 336,374-square-foot building with a fixed-rate loan.

HFF’s debt replacement team represented the borrower and arranged the loan with Nationwide Real Estate Investments. HFF will service the loan, proceeds of which will be used to pay off existing debt and provide capital for a major tenant improvement plan and lobby renovations.

HFF Senior Managing Director David Keller, Senior Director Ken Martin and Nelson Almond, an analyst, were part of the debt replacement team working with REI.

“Given the quality of the sponsorship, continued long-term commitment to the building by its major tenant and the overall strength of the downtown Indianapolis office market, this proved to be a very attractive opportunity for Nationwide,” Martin said in a prepared statement.

Strong local player

The 27-story tower is 82 percent leased to a diverse group of national and regional banks and law and consulting firms including Faegre Baker Daniels LLP and BGBC Partners LLP. REI also has its offices in the building, which has 9-foot ceilings and sweeping views of downtown Indianapolis and University Park. The property has an on-site garage for 300 vehicles and access to an 850-space garage connected by a skywalk. The property is located on Meridian Street, one of the most desirable addresses in the city, and two blocks north of Monument Circle in the heart of downtown Indianapolis.

REI owns approximately 1 million square feet of office space and manages more than 2.8 million square feet in the Indianapolis area. The firm has spent decades working on major development and construction projects across the U.S.

In October 2016, REI and a joint venture partner, Perennial Investments, sold 550 Congressional, a Class A, 106,404-square-foot office building in nearby Carmel, Ind., to an affiliate of Tryperion Partners of Los Angeles. REI and Perennial had invested about $1 million in renovations and upgrades, increasing occupancy from 25 percent to 83 percent at the time of the sale.

Earlier this month in Indianapolis, an HFF debt placement team that also included Keller arranged the refinancing of 360 Market St. with a $104 million floating-rate loan. Flaherty & Collins, the owner and developer of the newly built mixed-use multifamily and retail property in the city’s downtown, used the proceeds of the loan from Heitman LLC to retire construction financing. The development is on the site of the old Market Square Arena. It has 292 apartment units and 42,000 square feet of ground-floor retail anchored by Whole Foods Market.

Hot office market

Indianapolis’ office market has “been on a tear in this economic cycle, both in terms of rent and occupancy growth,” according to a recent Colliers International report. Rents were up 4.2 percent year-over-year in Class A buildings as of the second quarter, with occupancy growing to nearly 85 percent, up 120 basis points from same time last year. Colliers noted more new development and capital investment in the city’s office market is expected through the end of this year.

“Leasing activity, a positive future indicator for real estate fundamentals, is up 77 percent as businesses continue to locate within the Indianapolis market,” the report stated.

Image courtesy of HFF