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JLL lines up $215m mixed-use loan on niche retail, office sectors for Paramount

A three-bank consortium of Investors Bank, Oceans First Bank and Provident Bank provided the loan.

JLL Capital Markets, the debt advisory arm of Jones Lang LaSalle, has lined up a $215 million mortgage on behalf of Paramount Realty that will be used to refinance debt on a portfolio of niche retail and office properties in parts of Pennsylvania and Baltimore.

The financing is comprised of a trio of fixed-rate loans funded by Investors Bank, Oceans First Bank and Provident Bank, and is backed by a 1.67 million-square-foot portfolio of 30 office and retail properties.

David Sitt, a senior at JLL who was part of the team that arranged the loan, said lenders will still consider the right kind of retail properties. The retail properties in the portfolio include nine grocery-anchored retail centers, nine single-tenant retail properties and four neighborhood retail centers. The balance of the portfolio made up of eight medical and traditional office properties.

While retail and office were among the hardest hit sectors in 2020 and 2021, things are looking up for these property types moving forward.

According to a March Colliers report, the vacancy rate for the US retail market dropped below 5 percent at the end of 2021 and is expected to keep falling into 2022 as retailers continue to expand and retail openings now outpace closings.

Accelerated leasing activity is also said to drive vacancies down across all retail sub-types in suburban markets, which are experiencing the strongest population and buying power growth. On top of that, suburban retail rents are expected to grow by 4.1 percent this year, while properties in urban markets will increase by 3.8 percent.

In terms of demand, retail has seen positive absorption so far in 2022, although consumers spending more modestly in the coming months due to inflation and supply-chain concerns could be damaging.

The picture is similar for US office.

Vacancy rates are stabilizing and will start to decline in selected markets in the second half of the year; net absorption looks to increase as business confidence rises and asking rents are holding up.