Highwoods Properties Acquires Raleigh Office Tower
- Sep 30, 2016
The company’s total investment in the building, which encompasses 243,000 square feet, is expected to be $83.5 million, which includes $5.1 million of planned near-term building improvements and anticipated leasing capital expenditures to bring the property to stabilization.
Highwoods Properties estimates an annual cash and GAAP net operating income of approximately $6 million upon stabilization, which is projected to occur during 2018. The company noted that $0.3 million of acquisition costs will be expensed in the third quarter.
No debt was assumed in connection with this transaction, which brings Highwoods’ portfolio to 913,000 square feet of office space in Raleigh’s central business district (CBD), one of the city’s best business districts, and a development site that can support up to 300,000 square feet of Class A office space.
The company’s CBD Raleigh portfolio is concentrated within three city blocks and includes a combined parking ratio of 2.5 per 1,000 square feet, well above the competitive set at approximately 1.5 per 1,000 square feet. On a combined basis, the company’s total investment in its CBD Raleigh buildings is $251 million, which equates to $275 per square foot, an approximately 30 percent discount to the estimated replacement cost.
“In the heart of downtown and very close to our existing buildings, Charter Square is an excellent addition to our portfolio that further strengthens our franchise in CBD Raleigh. Our three building, downtown portfolio is 100 percent wholly owned and 100 percent unencumbered,” stated Ed Fritsch, president & CEO of Highwoods. “In addition, we are very pleased with the leasing velocity next door to Charter Square at our One City Plaza property (formerly One Bank of America Plaza), and we expect to capitalize on that strong leasing momentum at Charter Square. Lastly, we are 100 percent occupied at PNC Plaza.”
Image courtesy of Charter Square