By Gail Kalinoski, Contributing Editor
Jones Lang LaSalle’s Capital Markets team has secured $48 million in Credit Tenant Leasing financing from a foreign institutional investor for an industrial and bus maintenance complex in Newark, N.J., owned by Hartz Mountain Industries Inc.
The investor provided the 4.323 percent, fixed-rate, 24-year loan for the property at 601 Doremus Ave. that consists of 21.7 acres of land and 638,092 square feet of space that is leased to New Jersey Transit Corp. through 2036.
“This was an extremely complex financing assignment for a very unique property that involved a modified industrial condominium regime. The loan provides financing for a critical facility for New Jersey Transit, in which the entire city’s buses are maintained,” said Joe Garibaldi, JLL managing director, who lead the team on the deal.
Executive vice presidents Brion Haist and Bill Cavagnaro also worked on the financing deal.
The financing derives its proceeds from the direct sale of bonds to investors in the global capital markets rather than capital from commercial real estate lenders. Haist said CTL financing works well for corporations, the federal government, certain municipal government entities and healthcare facilities such as hospitals.
“By and large, most of these rely on the concept of the triple net lease,” Haist said, noting that the New Jersey Transit facility has a triple net lease.
Haist told Commercial Property Executive that the unidentified foreign institutional investor frequently participates in CTL financing because it securitizes the rent stream that comes off the triple net lease.
“The securitization is structured in a way to isolate those rent payments against the credit of the tenant making them,” Haist said, adding that most tenants have credit worthiness that is at or near investment grade.
Haist, who joined the Jones Lang LaSalle Capital Markets team in November, 2010, said his group has done over $8 billion of these types of transactions over the last 10 years, both at JLL and at other firms.
“It’s a focus for our unit,” he said.
Jones Lang LaSalle Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. In 2011, the team – comprised of more than 1,200 specialists – completed $60 billion in investment sale and debt and equity transactions globally. In the United States, the team grew its volume by 122 percent in 2011 and is gaining market share across all property types.