Normandy Real Estate Partners

Client: Normandy Real Estate Partners

Locations: Suburban Washington, DC

Real Estate Type: Suburban Office

Services Provided:

Capital Markets - Debt Financing

Project Overview

Normandy Real Estate Partners retained DTZ's Washington, DC, finance team to secure a bridge loan in order to retire acquisition debt on a 10-building, 788,515 square foot office portfolio it acquired in 2006. Within three years of the acquisition, Normandy leased 500,000 square feet, bringing portfolio occupancy to 93%. Nine of the properties are located in Northern Virginia, with six buildings concentrated in Westfield International Corporate Center in Chantilly, VA, and one each in Fairfax City, Alexandria and Reston, while one additional property is located in Columbia, MD.

The Challenge

  • Washington, DC’s suburban office market faced looming sequestration and BRAC move-outs, which made underwriting the Normandy portfolio highly complex.
  • Normandy’s portfolio included a mix of Class A and B properties, and 50% had lease expirations during the loan term.
  • The current loan had matured and was in the extension period, making the deal time sensitive.
  • The financing recapitalized the existing CMBS loan, mezzanine loan and junior mezzanine loan.

The Solution

  • DTZ's Normandy portfolio leasing teams met with potential lenders to restore confidence.
  • The finance team leveraged relationships with senior banks, mezzanine lenders and debt funds.
  • DTZ's finance team secured a special capital allocation for the loan from Morgan Stanley, which is not traditionally a bridge/balance sheet lender.
  • Securing a higher leveraged capital stack enabled the borrower to refinance the existing 80% loan to value capital stack without placing additional equity into the deal.

Results Achieved

  • Despite stagnant leasing and financial markets, DTZ secured a $140 million bridge loan comprised of senior and mezzanine financing at an 80%, as-is loan to value ratio.
  • The two-note structure provided Normandy with ideal flexibility while still delivering an attractive cost of capital.
  • DTZ delivered one stop lender execution via a special situations pocket of capital from Morgan Stanley that allowed the transaction to close in a quick time frame.