German American Capital Funding Jay Paul Co. Developments
Two of the biggest names in technology, Google and Amazon, will each soon be moving into new Silicon Valley headquarters space. Meanwhile, the owner of the properties the tech giants will be occupying, the Jay Paul Cos., has refinanced the portfolio, securing a $452.2 million loan from German American Capital Corp.
Meanwhile, German American is planning to parcel out the loan into four new commercial mortgaged back securities (CMBS), hoping to capitalize on the financial strength of the tenants.
The portfolio is comprised of two adjacent Class A office assets in Sunnyvale, CA, totaling 1.1 million square feet and includes Technology Corners (700,328 square feet) and Moffett Towers Building D (357,481 square feet).
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Technology Corners is comprised of four four-story buildings that were developed by the Jay Paul in 2001 at a total cost of $283.5 million ($405 per square foot). The four buildings are 100% leased to Google through September 2024, nine months after the loan matures.
Jay Paul will invest $7.2 million ($10 per square foot) into the space, and Google is reportedly making a substantial investment in the space on its own, to the tune of an additional $150 million ($214 per square foot). The technology company is in the process of completing tenant improvements and is expected to take occupancy in July 2014.
As part of the securitization, the property was appraised at $438 million. The same four buildings were previously collateral for a loan securitized in 2006. At that time, the property was appraised at $289 million.
The four-building complex is part of a larger 26-acre, 949,000-square-foot campus, which will include a 232,248 square foot office building expected to be delivered this month and that is also being leased by Google.
Moffett Towers Building D is an eight-story building that totals 357,481 square feet. Jay Paul developed the LEED Gold certified facility last year at a total cost of $138.5 million ($387 per square foot).
The building is 100% leased to A2Z Development Center Inc. through February 2024, two months after the loan matures. The lease is guaranteed by the tenant’s parent company, Amazon.com.
Jay Paul reserved $24.1 million ($68 per square foot) in tenant improvements, and Amazon is reportedly investing an additional $21.5 million ($60 per square foot) to build out its space, which was delivered in shell condition.
Moffet Towers D was appraised at $241 million for securitization purposes.
The loan on the five properties is being divided into four pari passu notes: a $155.0 million A-1 note that was contributed to the COMM 2014-CCRE14 transaction, a $110.0 million A-2 note that was contributed to the COMM 2014-CCRE15 transaction, a $120.0 million A-3 note that is being contributed to COMM 2014-UBS2, and a $67.2 million A-4 note that is being contributed to COMM 2014-CCRE16.
The loan accrues interest at a fixed rate equal to 5.03496% and has a cut-off date balance of $67.2 million.
Loan proceeds and $67.8 million in mezzanine debt were used to refinance $338.3 million of existing debt, fund reserves, pay closing costs, and return approximately $145.4 million of equity to Jay Paul affiliates.
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