Office

$82.5 Million Non-Performing Office Loan Sale

Minneapolis, MN, US

$82.5 Million Non-Performing Office Loan Sale_Property for Sale

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Asset description

Jones Lang LaSalle (“JLL”) has been retained on an exclusive basis by the lender to arrange the sale of an $82.5 million non-performing loan (the “Loan”) secured by a first-lien mortgage on the borrower’s fee simple interest in a 621,629-SF office building located in downtown Minneapolis, MN (the “Property”). The interest-only Loan was originated in September 2013 for an initial nine-year term and featured a fixed interest rate of 3.81%. The Loan is currently non-performing having reached maturity and defaulting in October 2022.


The Property is a 30-story, LEED Gold certified office building in the heart of downtown Minneapolis which offers approximately 60,000 SF of retail space on floors 1-2. The Property contains onsite amenities including a fitness center, bike hub, tenant conference center and lounge, and underground parking for 343 vehicles (1.81 per 1,000 SF). Originally built in 1991, the Property is currently 68.9% occupied by a total of 38 tenants and offers a 4.5-year WALT. The top three tenants, which include a nationally recognized law firm and two S&P-rated firms, account for 31% of the building and all have lease maturities after 2026. The offering presents investors with an opportunity to acquire a non-performing loan secured by a well-located office building with upside at an attractive basis.


Important Dates

Indicative Bid Date Tuesday, December 6th 

Best & Final Bid Date Thursday, December 15th 

Closing The week of December 19th

Attributes

Loan Status
Non-Performing

Investment highlights

  • Path to Ownership - The Seller is currently in negotiations to get a Deed-In-Escrow from the current Sponsor, giving investors a direct path to title.
  • DESIRABLE BASIS / VALUE ADD OPPORTUNITY - The sale allows an investor the opportunity to acquire the note at a reset basis, below replacement cost, and at a discount to the current Sponsor’s cost basis. 
  • LEASING POTENTIAL - The Property is currently 68.9% occupied, allowing investors to boost cash flows through continued leasing. In addition, four floors are fully vacant, offering investors a blank-canvas opportunity. The Property has historically had strong leasing momentum with 5 tenants leasing 18,434 SF of space over the past 9 months.
  • STRONG IN-PLACE CASH FLOWS - The Property is producing strong cash flows, with approximately $7.5 million NOI representing an 8.9% debt yield as of September 2022.
  • SUSTAINABILITY - The Property is LEED Gold certified, ENERGY STAR certified, a BOMA 360 Performance Building, and was awarded The Outstanding Building of the Year (TOBY) for excellence for buildings between 500,000 and 1,000,000 Square Feet.
  • SKYWAY CONNECTED - The Property is part of the Minneapolis Skyway System, a 9.5-mile enclosed second-story bridge system, connecting 80 city blocks.

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Last updated
Dec 2, 2022