Cannon Hill Capital Partners is doubling down on its office conviction, striking a partnership with TriPost Capital Partners to scoop up distressed assets across the Northeast corridor.
The firms are aiming high, eyeing deal sizes above $50 million and have as much as $1.5 billion in buying power for office properties, non-performing loans and rescue capital, the Commercial Observer reported. The venture marks Cannon Hill’s first formal tie-up with TriPost.
Cannon Hill — founded by Normandy and Columbia Property Trust alums Jeff Gronning, Melissa Donohoe and Eric Rubin — and TriPost plan to focus on New York, Boston and Washington, D.C., markets the Cannon Hill team knows intimately from decades of investing and the 10 million square feet currently under management.
New York is leading the office recovery, Rubin said, but D.C. and Boston offer pockets of opportunity.
In Washington, government sluggishness continues to dampen demand, yet private-sector tenants, particularly law firms, are showing signs of life. Boston, meanwhile, is dealing with tenant churn, but its smaller office footprint compared to larger markets could create select outsized opportunities, or at least that’s what Cannon Hill and TriPost have in mind.
Both sides say the timing is right for the partnership after years where office buying couldn’t pencil out. Liquidity is creeping back, lenders are tiptoeing into the sector again and leasing volumes in New York have rebounded to pre-Covid levels.
Distress will be the core theme of the partnership, which will target both underwater owners willing to cooperate with lenders on discounted sales and banks eager to unload non-performing loans, Gronning said.
With roughly $500 billion in office loans maturing by 2028, per MSCI, the firms expect a multi-year runway to assemble a six-to-eight asset portfolio positioned for a short hold and, they hope, outsized returns.
Cannon Hill has already dipped back into the sector, partnering with TPG and Global Holdings on deals at 101 Franklin Street and 888 Broadway. The TriPost partnership is designed to scale that strategy, leveraging Cannon Hill’s vertically integrated platform and its team’s comfort underwriting everything from Class C rehabs to trophy repositionings.
— Holden Walter-Warner
Read more
SL Green’s NYC property debt vehicle surpasses $1B
“Coming out of the woodwork”: Wall Street circles commercial distress
Global Holdings lands $130M refi for Netflix’s Union Square offices