Minnesota Credit Unions Finance $31 Million Office Tower Deal

Five Minnesota credit unions have lent $31 million to a New York developer who bought a prominent 17-story office building in the Minneapolis area last summer.

TopLine Financial Credit Union in Maple Grove, Minn. ($675 million in assets, 47,476 members as of June 30) is listed in Hennepin County records as providing a $31 million leasehold mortgage to the buyer of the property at 8400 Normandale Lake Blvd. in Bloomington, Minn.

The financing included two senior secured notes on equal footing issued in June: One for $22.1 million at 5.1% for 36 years and the other for $8.1 million at 5.32% for 40 years.

TopLine Financial was one of four founding credit unions of United Financials Capital, LLC, a Minneapolis CUSO formed early this year to allow smaller credit unions a way to participate in commercial financing throughout Minnesota and the Upper Midwest.

UFC President/CEO Michael Dalglish said UFC facilitated financing for the acquisition of the 399,855-square-foot building called Normandale Office Park Three through TopLine Financial, which was the lead lender, along with four other credit unions:

• Hiway Credit Union, Saint Paul, Minn. ($1.7 billion, 83,250 members), another one of the four founding UFC members.
• Centricity Credit Union, Hermantown, Minn. ($234.9 million, 18,036 members).
• Members Cooperative Credit Union, Duluth, Minn. ($1.1 billion, 53,415 members).
• Minnco Credit Union, Cambridge, Minn. ($480.1 million, 30,350 members).

The buyer was Opal Holdings, a New York investment firm that has bought several large office buildings around the country in the past few years.

TopLine Financial President/CEO Tom Smith said the financing showed how credit unions working together can close commercial loan financing deals.

“Partnering with United Financials Capital provides Minnesota credit unions with access to opportunities that they may not have been able to take advantage of by themselves,” Smith said. “Working together, Minnesota credit unions can help support each other and their local business communities to deliver competitive commercial lending opportunities.”

The two other UFC founders that were not part of the deal are Affinity Plus Federal Credit Union of Saint Paul, Minn. ($3.9 billion, 239,461 members) and SPIRE Credit Union in Falcon Heights, Minn. ($2.1 billion, 151,494 members).

Dalglish said UFC is reaching out to Minnesota credit unions with financing prospects and receiving credit unions that bring opportunities to UFC to facilitate the process.

“This is just the beginning for UFC,” Dalglish said. “We look forward to serving communities throughout Minnesota to grow this lending platform, which harnesses the resources and the collaborative nature of credit unions.”

MetLife Investment Management and Allstate sold the Normandale Lake office complex that included the 8400 Tower in June to Opal Holdings, a private New York real estate investment company. The sales price this year’s deal was not disclosed, but MetLife and AllState bought the complex for $369 million in 2014.

Cushman & Wakefield, the sellers’ agent on this year’s deal, described it as one of the state’s largest “trophy office sales” with five inter-connected buildings covering 1.67 million square feet. The Class A suburban office development was built between 1983 and 2009 and was 91% leased in July to tenants including Aon Benfield Global, Towers Watson, Schwan’s Consumer Brands and Dairy Queen.

Besides the 8400 tower built in 1984, the deal included a the 24-story 8500 Tower covering 467,016 square feet, the 11-story 8200 Tower with 277,481 square feet, the 13-story 8300 Tower with 285,753 square feet and a 12-story office building with 242,598 square feet.

Opal Holdings’ website said it has more than $4 billion in real estate under management. It said it “targets value-added or opportunistic properties in the office, retail, residential and hotel sectors looking to be repositioned or redeveloped.”

It paid $140 million in July for the AIG Office Tower in Iselin, N.J., $137.5 million in April 2021 for a 40-story building in Burnett Plaza in Fort Worth, Texas, $124.5 million in August 2021 for an office complex near Philadelphia that has the headquarters for Toll Brothers, and $150 million in 2020 for an office tower in Orange County, Calif.