HFF Arranges $353M

Michael Tucker mtucker@mba.org

July 19, 2018


Holliday Fenoglio Fowler, Houston, arranged $324 million in construction financing and joint venture equity for Arsenal Yards, a six-building mixed-use redevelopment of the former Arsenal Mall in Watertown, Mass.

The HFF team worked for Boylston Properties, The Wilder Cos. and Jonathan Bush to source $102 million of equity from institutional investors advised by JP Morgan Asset Management. Wells Fargo Bank supplied a $222 million construction loan.

Arsenal Yards sits on the banks of the Charles River west of Boston in East End Watertown. With construction currently underway and the first phase scheduled to open next year, the one million square-foot Arsenal Yards will include 250,000 square feet of shops and restaurants anchored by Roche Bros. and The Majestic Cinema, 200,000 square feet of office and lab space, 425 residences and a 150-room Hampton by Hilton.

Nearby demand drivers include corporate headquarters for AthenaHealth, Bright Horizons, New Balance and Harvard University's business school campus expansion and $1 billion Science and Engineering complex set to open in 2020.

The debt and equity placement teams representing the borrower included HFF Senior Managing Directors Fred Wittmann and Coleman Benedict, Senior Director Brett Paulsrud and Associate Henry Schaffer.

"This redevelopment will dramatically transform the landscape of Watertown, adding a significant amenity base to the area," Paulsrud said.

HFF also arranged $28.75 million in preferred equity and construction financing to develop the first phase of Twin Lakes Center in Cary, N.C. A 153,000-square-foot Wegmans grocery store will anchor the Research Triangle Park retail project.

Senior Managing Director Greg Nalbandian, Senior Director Roger Edwards, Associate Devlin Murphy and Analyst Andrew Zilenziger arranged $6.25 million in preferred equity with a life insurance company and a $22.5 million floating-rate construction loan with two one-year extensions with CapitalSource for developer LeylandAlliance.

The 35.8-acre Twin Lakes Center will contain restaurants, retail and seniors housing overlooking a lake. The first phase entails development of the four-building retail center that is currently 93 percent pre-leased. The retail phase is expected to deliver in July 2020. More than 70,000 residents earning an average annual household income of almost $110,000 live within three miles of the project.

"Having a fully executed 25-year ground lease with Wegmans, which accounts for 85 percent of gross leasable area and 67 percent of net operating income along with some other pre-leasing, we were able to structure a very aggressive non-recourse construction loan between the lenders at a very attractive interest rate and no equity participation," Nalbandian said.

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