Highwoods Properties Invests $92M in Acquisition and Renovation of Iconic Office Tower in Raleigh
- Sep 11, 2014
by Adriana Pop, Associate Editor
In a $92.3 million deal, Highwoods Properties has acquired another landmark property in downtown Raleigh, namely the One Bank of America Plaza, a 17-story, 374,000-square-foot multi-tenant office building at 421 Fayetteville St.
The purchase price, which is approximately 25 percent below the estimated replacement cost, includes a planned $8.3 million near-term renovation of the property.
According to the Triangle Business Journal, the company purchased the building from a partnership led by The Simpson Organization of Atlanta. The investors acquired the asset in 2005 for $47.1 million.
Home to a diverse customer base in the healthcare, legal, technology and financial services industries, the tower’s occupancy rate is currently at 82.1 percent. The Triangle executive offices for Bank of America, the Stewart engineering firm and the Raleigh office for New York financial software firm Ipreo are among the property’s tenants.
Located in the heart of the city’s downtown area, One Bank of America Plaza offers easy access to venues such as the City’s Convention Center, the Red Hat Amphitheater, the Duke Energy Center for the Performing Arts and many restaurants and hotels.
“In addition, the building’s proximity to PNC Plaza, less than two blocks away, will enable us to garner operating synergies,” says Ed Fritsch, president and CEO of Highwoods.
The company’s 33-story PNC Plaza is 100 percent leased, and the city’s CBD submarket has an overall occupancy of 91.7 percent.
“Early in the evaluation process, we identified a well-defined scope of opportunities for ‘Highwoodtizing,’ and we are excited about the significant improvements we will make to enhance the property. With its prime location, meaningful occupancy upside and average in-place rents that are 10+ percent below market, this building is a solid addition to our portfolio,” added Fritsch.
Highwoods funded the acquisition of One Bank of America Plaza with proceeds from non-core dispositions, its ATM program and borrowings under its revolving credit facility, without assuming any debt in connection with the transaction.
The company’s wholly-owned Raleigh portfolio now comprises 4.4 million square feet that is 90 percent leased, with an additional 668,000 square feet under development that is 81.4 percent pre-leased.
Photo credits: Highwoods Properties