Former Wachovia HQ to Be Purchased for $245M

By Eliza Theiss, Associate Editor Hot on the heels of Parkway Properties Inc.’s $250 million purchase of Hearst Tower, one of the biggest office property sales of the year in the Charlotte area, comes another major sale. Israeli real estate firm Azrieli Group Ltd. recently announced it has entered a $245 million purchase agreement for [...]

Hot on the heels of Parkway Properties Inc.’s $250 million purchase of Hearst Tower, one of the biggest office property sales of the year in the Charlotte area, comes another major sale. Israeli real estate firm Azrieli Group Ltd. recently announced it has entered a $245 million purchase agreement for the 985,315-square-foot One Wells Fargo Center.

According to the purchase agreement between Azrieli and developer-owner Childress Klein Properties, the deal includes full rights to the 42-story office building, as well as the enclosed seven-level, 1,100-car parking garage. CBRE Group Inc. brokered the deal.

Located at 301 South College St. in Charlotte’s downtown submarket, the 1989-built property features Class A office space and was most recently renovated in 2008. The property features an exterior plaza.

Wells Fargo Bank, the property’s namesake, holds a long-term lease agreement for about 70 percent of the total surface. The lease expires in December 2021 with a contractual mechanism for a one-time increase in rent—approximately 20 percent—during the lease period and the option to extend for an additional 10-year term.

The property is currently 97.7 percent leased, with 21,055 square feet of leasable space. According to Childress Klein’s website, the leasing rate is $29 per square feet. Childress Klein has been hired to stay on as property manager until December 2015, with an automatic contract extension in the event neither party seeks to terminate.

Azreali estimates an annual net operating income of $18.5 million until the main lease agreement is active, with the first year of ownership generating $16.3 million.

Financing for the acquisition will be covered from various sources, with $160 million being negotiated with foreign financing entities for a fixed interest rate of about 4.5 percent for a period of 10 to 12 years. The remaining 35 percent of necessary funds are to be secured from independent sources. Transaction costs are estimated at $1.6 million.

Azrieli Group owns in excess of 7.7 million square feet of leasable area and has more than 3.5 million square feet under construction. Almost 2 million square feet of leasable commercial and office space are owned in western countries, with the bulk of those assets in Houston, Tex.

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Photo credit: Kozo via Wikimedia Commons