A $450M Tristate Portfolio Traded Off-Market With the Debt Attached

A joint venture of Saber-Hightower, Lincoln Property Co. and Waterfall Asset Management has acquired a four-asset, three-state portfolio from National Resources for $450 million, in a deal announced Wednesday, August 19.

The holdings span Edgewater Harbor on River Road in Edgewater, New Jersey, with 262 apartments and 60,000 square feet of retail; iPark 84, a roughly 1.8 million-square-foot business park in East Fishkill, New York; a 400,000-square-foot mixed-use center at 761 Main Ave. in Norwalk, Connecticut; and the new 147-unit Trilogy Lofts in Yonkers, New York. The transaction also includes multiple development sites.

Cushman & Wakefield's Andy Merin, Frank DiTommaso and Ryan Dowd represented the seller, while John Alascio, Alex Hernanez, Brad Domenico, Chuck Kohaut and Mitch Rothstein arranged acquisition financing for the partnership.

Saber-Hightower principal and co-founder Marty Berger described the process as an exceptionally intricate off-market negotiation and execution, citing scale, asset diversity, varying locations and the transitional nature of the portfolio, which spans ongoing construction, pending leasing activity, debt assumptions and varying stages of approvals.

The new owners said they plan to renovate and reposition the multifamily assets, lease up and stabilize existing vacancy, expand the medical office tenancy at Norwalk, and selectively develop or monetize the portfolio's surplus land parcels. Lincoln executive vice president and market leader Jared Toothman called the acquisition a milestone in the firm's tristate growth, noting a New York metro multifamily development pipeline of more than 5,000 units.

Waterfall partner and head of commercial real estate Zachary Liebmann described it as the firm's largest real estate acquisition to date, and pointed to the financing as the structuring challenge: two CMBS assumptions plus two balance-sheet loans across a mixed-asset pool.

Implications

The financing is the story. Two CMBS assumptions on a portfolio this heterogeneous is a real constraint on the buyer universe, because assumption approval timelines, lender consent and release provisions eliminate most bidders before price is discussed. That is likely why it cleared off-market: the seller optimized for certainty of execution over a marketed process, and the buyers were rewarded for being able to underwrite around inherited debt. The Norwalk medical office expansion is the quiet part, since converting general mixed-use square footage to clinical tenancy is a rent and duration upgrade. The surplus land is optionality the seller could not monetize and the joint venture can.