05/23/2012

BofA Maps Sale-Leaseback of Big NJ Campus

Continuing its disposition spree, Bank of America wants to sell and fully lease back a New Jersey corporate campus that could command $400 million in what would be the state’s biggest office trade ever.

The 1.8 million-square-foot complex, in Hopewell Township, is expected to attract bids from foreign players, large REITs and institutional investors. At the $222/sf valuation, the capitalization rate would be a relatively high 9% because BofA would have options to reduce the amount of space it occupies, according to market players.

The 12-building campus is fully occupied by Merrill Lynch, a division of BofA. Under BofA’s sale-leaseback plan, BofA would sign a lease for at least 10 years on all of the space. The buzz is that the rent would be about $20/sf on a triple-net basis, with annual rent bumps. But Merrill could vacate 20% of the space after three years and another 20% after eight years.

Cushman & Wakefield and BofA’s in-house brokerage arm are sharing the listing.

The 12-building complex, which was constructed in 2001, is at 1550 Merrill Lynch Drive, about two miles from an Interstate 95 exit.

New Jersey’s top four office trades by dollar amount all took place in Jersey City, which is just across the Hudson River from Manhattan. Three of those deals closed last year, including the record-setting sale of the 1.1 million-sf Newport Tower. Multi-Employer Property Trust of Washington acquired that building from Brookfield Office Properties of New York for $377.5 million, or $349/sf.

The Merrill complex’s valuation is far higher than any other suburban New Jersey property has fetched, though some have traded at higher per-foot prices.

BofA has been selling off big chunks of its property portfolio in recent months to raise capital, including large buildings in Boston and Charlotte. It also reached sales agreements for towers in New York and Charlotte, and plans to list a Chicago building.

The bank mostly has given the listings to the brokerages that already lease and manage the properties — usually Cushman, CBRE or Jones Lang LaSalle. As a result, top-tier brokerage Eastdil Secured, which doesn’t manage properties and is owned by rival bank Wells Fargo, has been shut out.

BofA’s in-house brokerage is sharing the listing in each case and overseeing the sales process. But the outside brokers are conducting the marketing campaigns and receiving full brokerage commissions.

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