State Leased Office Portfolio Trades for $26.6M

A group of investors including Lakestar Properties, Goldstone Group, and Brius Management acquired the seven-building office portfolio in Dover, DE from CD Realty Advisors, Inc. for $26.6 million, or about $118 per square foot. 

The portfolio is comprised of six office buildings totaling 170,696 square feet at 800-861 Silver Lake Rd. in addition to a 55,050-square-foot industrial/office building two miles south at 100 Enterprise Pl., all in the Kent County submarket of Philadelphia. The assets offer regional access with proximity to Dupont Hwy / Rt 13 and Rt 1. 

Included in the Silver Lake portfolio is a six-acre site on the western shore of Silver Lake with approvals in-place to develop an additional 60,000 square feet of office space. 

"This was an excellent opportunity for an investor to take over a professionally managed state-leased asset with no deferred maintenance, new roofs on six of the seven buildings and an in-place solar panel system providing tenants in Silver Lake with a green energy source." 

Occupancy across the portfolio is currently at 97 percent, with various State of Delaware agencies occupying more than 80 percent there, including the Office of Management and Budget and its various divisions, Dept. of Insurance, Dept. of Family Services, Dept. of Finance, Veterans Affairs, Criminal Justice, Dept. of Treasury, and the Dept. of Natural Resources and Environmental Control, among others. 

"The agencies located here are core to the state government, and have demonstrated their satisfaction with these buildings by growing their occupancy from 20 percent of the portfolio 15 years ago to 80 percent today. The varying expiration dates and the state’s AAA credit made this a rare opportunity for a buyer seeking exceptional returns from an institutional-quality portfolio." 

The acquisition was funded in-part with a $21.75 million loan from Ladder Capital. Shaya Ackerman with Eastern Union Funding arranged the financing, locking in three years of interest-only payments on a 10-year term with a 30-year amortization schedule. 

"Government leases have built into them an out-clause allowing them to break the lease at any time, which from a financing standpoint is a huge risk," said Ackerman. "We worked in tandem with Ladder Capital to minimize that risk for everyone involved and the final product was a non-recourse loan backed by a tremendous asset." 
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