Axonic Capital Closes $30.8 Million Senior Loan for Deugen Development's Parsippany Office-to-Industrial Conversion

Axonic Capital has closed a fully funded $30.8 million senior loan to Deugen Development to finance the acquisition, carry, and demolition of 5 Wood Hollow Road, a 330,000-square-foot Class B office property in Parsippany, New Jersey, the firms announced June 18, 2026. The deal sets the stage for a future 340,000-square-foot Class A industrial development on the site.

Deal Structure and Timeline

The senior loan covers Deugen Development's purchase of the asset as well as pre-development costs, including the eventual demolition of the existing office building. According to the announcement, 5 Wood Hollow Road is expected to be fully vacant by year-end, with demolition slated to begin in late spring 2027. Other financial terms of the transaction were not disclosed.

The transaction was sourced directly from the borrower, an off-market arrangement that Axonic Capital described as an opportunity to lend to an experienced local developer in a gateway market. Kyle Mathis and Eric Gormeley of Deugen Development worked with Axonic to arrange the financing.

"We continue to see opportunities to finance strong, local developers in high-quality asset repositionings," said Erik Nygaard, Principal and Portfolio Manager at Axonic Capital.

Parsippany's I-287 Corridor and the Industrial Opportunity

5 Wood Hollow Road sits within the I-287 corridor, a location that Deugen Development's Chief Investment Officer Kyle Mathis cited as central to the firm's investment rationale.

"The acquisition of 5 Wood Hollow aligns perfectly with our investment thesis of targeting premier industrial development projects in markets with strong demand and high barriers to entry," Mathis said. "The I-287 corridor's direct access to major transportation infrastructure and deep concentration of sophisticated industrial users make Parsippany one of the most compelling locations in the Northeast for this asset class."

Office-to-Industrial Conversion

The 5 Wood Hollow Road transaction involves the demolition of an existing Class B office building and its replacement with a larger Class A industrial facility. The existing building's anticipated full vacancy by year-end is noted in the announcement. The planned 340,000-square-foot Class A building would represent a net increase of approximately 10,000 square feet over the existing office footprint.

About the Firms

Founded in 2010, Axonic Capital is a New York-based alternative investment manager with approximately $8 billion in assets under management. The firm focuses on structured credit and commercial and residential real estate debt and equity, with a capital base that includes private limited partnerships, separate accounts, insurance company mandates, and publicly listed fund structures.

Deugen Development is a multi-generational, family-owned real estate firm headquartered in Paramus, New Jersey. The company specializes in the acquisition and development of commercial real estate across New Jersey and manages the full development cycle from site selection and entitlement through construction and asset management. Deugen has developed industrial, multifamily, self-storage, and retail properties throughout the state, with its current investment focus on ground-up industrial development and value-add repositioning in supply-constrained infill markets.