As reported in The Real Reporter by Joe Clements
BRAINTREE, MA — The Olde Towne Team will be back in Boston on Monday, but another local contingent beat them to the punch with its own homecoming of sorts, as Albany Road Real Estate Partners closed this week on Braintree Executive Park, a two building, 125,000-sf office property secured for $17.2 million from Dinosaur Capital and the Grossman Cos. in a deal negotiated by Jones Lang LaSalle’s Capital Market Group. JLL also arranged a $10.6 million acquisition loan from JPMorgan on behalf of the buyers, a Hub-based operation launched last July that had previously secured assets in Connecticut, New Hampshire and Rhode Island.
“We are really pleased to have acquired such a quality park and to put our first Massachusetts asset on the books,” President Christopher J. Knisley conveys to the Real Reporter after the closing. Thanks to a dedicated capital improvements and lease-up program conducted by Grossman, Albany Road is taking on a stabilized development again topping 90 percent occupancy despite plunging into the 60 per- cent range after the 2008 recession hit.
Knisley maintains the slump was more a product of unfortunate happenstance for Braintree Executive Park when one tenant outgrew its space and another decided to move nearer to Boston. Constructed in 1988 and 1989, Grossman had traditionally been able to keep occupancy above 90 percent and moved quickly to rectify the fallow space. “We know we are getting solid, quality buildings because we’re buying them from the Grossman family,” Knisley states, adding Albany Road’s predecessor “should be commended for their recent repositioning of the park and the success they’ve had in leasing up the buildings over the past year.” Albany Road has even engaged Grossman to continue managing the property.
Principal David Grossman was equally complementary to Albany Road, praising Knisley for his firm emerging as such a force so quickly and being able to evaluate an opportunity. “Chris has a lot of experience and a great understanding of the market,” he says. As to Braintree Executive Park, “we were able to see eye- to-eye very quickly on the property” and forged an agreement that led to its suc- cessful conclusion. “We’re very excited about the way things turned out, and we think it will be in good hands with Albany Road,” says Grossman.
The path to this week’s consummation began nearly two years ago when Grossman was able to buy an overbearing loan on Braintree Executive Park, changing the capital stack enough to win leases in a highly competitive submarket. JLL played a role in that situation as well, with the leasing effort led by South market experts Thomas Kent and Sean Lynch. “Tom and Sean did a fabulous job for us,” recounts Grossman, while an estimated $2 million was spent refurbishing the property to support their efforts.
JLL Capital Markets chief Frank Petz handled the exclusive sales listing on an assignment he teamed with Robert Borden to oversee. Petz concurs that the upgrades helped attract multiple parties, but Albany Road was deemed the best choice based not just on pricing, but also a comfort level in the investor. “Albany Road was able to show there was very very limited exposure to them not being able to follow through,” Petz says. “That did make (the buyers) more comfortable in picking them.”
On tracking down the financing for Albany Road, Senior VP Jonathan Schneider of JLL’s Debt and Equity group also found plenty of interest. The JPMorgan CMBS loan has a 10-year term with 30 year amortization and interest only provision for the first two years. The all-in rate equates to 4.09 percent. The per-sf price of $137 in the sale appeared to have satisfied both parties, but Albany Road then dropped its effective basis even lower by separately negotiating a buyout of five rooftop antenna leases at Braintree Executive Park. The $2.45 million earned from that—and a provision for a majority of the revenue in future leases struck by American Tower— puts the per-sf price at $14.7 million, or just $117 per sf for Class A product. That, says Knisley “is a psf price that we are really pleased with” especially since Albany Road was not keen on handling that element as part of its purchase.
Besides the revitalized physical plant and tenant leasing that has put Braintree Executive Park at 92 percent occupancy, Knisley says he believes the buildings benefit from an accessible location. South Shore employees and executives are spared the horrors of the Braintree split, getting off just before the juncture of Route 3 and Interstate 93, and being across the street from the Red Line subway makes for a solid transit-oriented element. “Having the MBTA there is very important,” says Knisley, maintaining at least two tenants in the park had that as a deciding factor in taking space.
Braintree Executive Park is the second office asset in Albany Road’s quiver, with the other located in Warwick, RI. The group’s first purchase was a retail plaza in New Hampshire last August, followed by a portfolio of four self-storage facilities in Connecticut. While he would not discuss specifics, Knisley says the company does have targets in sight for new purchases as the company approaches its first anniversary in July. To support the burgeoning operation, Albany Road recently brought in Mark Tryder after a seven-year stint with prolific investors Colony Realty Partners. Citing Tryder’s 10-year career and training as an accountant and CPA who will work on portfolio analysis and other intricate financial modeling, Knisley says “It’s great to have Mark on board. I think his skills are going to be a great addition to helping us achieve our growth expectations,” which in the near term hopes to have capital placed in the $100 million range by the first year anniversary.
One entity Albany Road might well encounter in its search for fresh deals is the Grossman Cos. themselves, with the firm’s $16.9 million purchase of a Connecticut office building earlier this week exemplifying the Quincy firm’s own manifest destiny. The firm has previously dabbled in the Nutmeg State, and is also active in Rhode Island. David Grossman says the firm is seeking out value-add opportunities in the $3 million to $20 million range. In the Connecticut purchase, Grossman and its partner were able to take out an investor hamstrung by a steep acquisition price double the $16.9 million spent for Lee Farms Corporate Park by the new ownership. “We love to partner with other firms,” says Grossman, who has an ongoing relationship with Dinosaur Capital that included investment in a retail unit at The Marketplace in Braintree in addition to Braintree Executive Park. “We continue to look at opportunity with them,” says Grossman.