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Workspace Property Trust Wraps Up $1.3 Billion Refinancing from JP Morgan Chase

Company Sees Continued Strengthening in the Suburban Office Market
June 19, 2018
One Liberty Corporate Center in Edina, MN, is Workspace Property Trust's largest office building.

When we last checked on Workspace Property Trust, a private real estate investment firm led by former Mack-Cali Realty executives Thomas Rizk and Roger Thomas focused on buying and operating suburban office space, things were not looking too good.

In November 2017, Workspace called off a planned initial public offering, citing unfavorable market conditions after the stock market had been whipsawed by several bouts of volatility.

The company, a partnership among Rizk Ventures, Safanad, Forum Partners, JMP Group and EverWatch Capital, had hoped to sell 39 million shares of common stock in an IPO at between $12 and $15 per share, raising about $527 million at the midline of its pricing range.

This week, Workspace announced it found other financing it needed in the form of a $1.275 billion portfolio financing placed with JP Morgan Chase Bank.

The proceeds from this financing will be used to repay existing shorter-term debt, redeem preferred equity interests and for general corporate purposes.

As of September 2017, Workspace had $816 million of debt scheduled to mature this coming October and $99 million in preferred equity interests maturing the following October.

The borrowings were used to purchase 108 office and flex buildings in suburban submarkets in Philadelphia, Minneapolis, Tampa, Phoenix, and South Florida from Liberty Property Trust for approximately $969 million.

Terms of the new loan were not disclosed.

"Our ability to enter into this debt facility in both the amount and on the terms we did speaks volumes about the value Workspace has generated in less than two years' time," said Thomas Rizk, Workspace co-founder and chief executive officer, in a statement announcing the refinancing.

Rizk added that the refinancing "provides a tremendous validation of our strategic focus on suburban office."

Since acquiring its portfolio from Liberty Property Trust, under two separate transactions in December 2015 and October 2016, Horsham, PA-based Workspace Property Trust has completed over 3 million square feet of leasing transactions.

"From the beginning, Tom and I believed in the gravitational pull the suburbs would have on the growing numbers of millennials getting married, forming families and seeking lower costs of living, and better housing and schools, just as every generation before them," said Roger Thomas, co-founder, president and chief operating officer. "Employers are following this migration, resulting in higher rents and occupancy growth in our suburban office markets."

Workspace Property Trust owns, leases and manages 147 properties and over 9.8 million square feet of premier office and flex space.

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