Long Island office owners borrow $280 million to refinance 14 properties
The We're Group is using some of the borrowed money to refinance properties in Jericho, Lake Success and Melville. Credit: Joseph Sperber
The owners of 14 Long Island office buildings have borrowed $280 million to pay off an existing loan as they look to convert some of their space into in-demand medical offices.
New York City-based TPG Angelo Gordon and Melville-based The We’re Group will use the money to refinance properties in Jericho, Lake Success and Melville, as the region sees high demand for medical office space and major plans for a new hospital in Melville.
TPG and the We’re Group’s 14 properties cover 1.51 million square feet of medical and suburban office space, and are mostly already leased to large medical providers, including Northwell Health, NYU Langone School of Medicine and Catholic Health, according to a release from the commercial real estate brokerage Newmark, which helped arrange the deal for the new loan.
The new debt comes as TPG and the We’re Group shift some of the traditional office space at the 14 properties into medical offices, according to the release.
Medical office space is “highly desirable" right now, said Chris Kramer, Newmark’s vice chairman of global debt and structured finance. “Medical office usage and occupancy has continued to trend positively," he added.
Part of that demand for medical office space stems from Long Island’s aging population, and has led office and retail owners to renovate their buildings for medical office tenants, said Gus Nuzzolese, an executive vice president with the commercial real estate brokerage Colliers.
“There is a high demand for patient care. A lot of space that was formerly office space has been converted to medical," Nuzzolese said.
For example, Nuzzolese said Catholic Health transformed the former Party City at 610 Broadhollow Rd. in Melville into a new ambulatory and urgent care. The facility opened last year, Newsday reported.
Demand for medical office space may rise further as NYU Langone Health plans to open a massive, more than 1-million-square-foot academic medical center in Melville at 1 and 2 Huntington Quadrangle, which TPG and the We’re Group sold to the health system, Newsday reported.
Two banks, Citi Group and Japanese investment bank Nomura, provided the new $280 million debt. Citi Group declined to comment. A representative for Nomura did not immediately respond to a request for comment.
The money will repay part of the $350 million Citi Group and Barclays previously lent TPG and the We’re Group in 2021 on a portfolio of 16 properties, which included 50 Jericho Quadrangle, according to the data company Green Street. TPG sold the 145,000-square-foot office building at 50 Jericho Quadrangle to MDJ Realty, a spinoff of Fairfield Properties, last month.
TPG Angelo and the We’re Group did not immediately respond to requests for comment about the loan or the location of the 14 properties.
