Hines Takes 255 KSF Minnesota Office Building for $70M

Hines Global REIT has picked up a premier 254,900-square-foot office property in Minneapolis with a $69.5 million sale-leaseback transaction with Cargill Inc.

January 6, 2012
By Barbra Murray, Contributing Editor

Hines Global REIT has picked up a premier 254,900-square-foot office property in Minneapolis, Minn., in a $69.5 million sale-leaseback transaction with Cargill Inc., a producer and marketer of food, agricultural, financial and industrial products and services. Hines, sponsor of Hines Global REIT, will take on management responsibilities at 9320 Excelsior Blvd. and Cargill will stay put, occupying the building in its entirety under a new long-term lease scheduled to expire at the end of September in 2023.

“Whether single-tenant or multi-tenant, Hines focuses on great real estate with solid credit tenancy that meets the return objectives of our investors,” Edmund Donaldson, senior vice president with Hines, told Commercial Property Executive. “In the case of 9320 Excelsior, the acquisition happens to be a single-tenant sale leaseback.”

Developed in 2010, 9320 Excelsior is one of three structures at the Excelsior Crossings campus off Hwy. 169. With a prime location and Class A status, the property fits right in with Global REIT’s portfolio. The seven-story building is also LEED Gold-certified by the U.S. Green Building Council.

Hines Global relied on a $65 million bridge loan from JPMorgan Chase Bank N.A. and proceeds from its current public offering to finance the acquisition, which is the REIT’s second in Minneapolis. In late 2010, Hines Global bought Fifty South Sixth, a 94 percent-leased, 698,600-square-foot office tower in the city’s central business district for $180 million.

“Hines has had a longstanding presence in the City and we are strong believers in its underlying fundamentals,” Donaldson noted. “The market has been among the nation’s leaders in office using job creation over the last several quarters and is projected to continue to be among the leaders over the next several years. The Global REIT will continue to evaluate opportunities in this market as long as portfolio concentration levels remain below acceptable levels.”

The REIT’s purchase of the Cargill property kicks off what may very well be another year of binge shopping. In 2011, Hines Global added five assets to its portfolio, including the 750,000-square-foot FM Logistic Industrial Park in Moscow and the 152,800-square-foot Stonecutter Court office complex in London. “We expect to invest at a similar pace in 2012,” Donaldson said.

And those investments will occur near and far. “Global REIT has managed to achieve solid regional diversification within its U.S. portfolio and will continue to focus on markets like Minneapolis that are expected to lead the nation in private sector employment growth over the next several years,” Donaldson said. “The Global REIT has targeted making up to 50 percent of its investments internationally. In addition to the U.K. and Russia, in the near term, the vehicle is focused primarily on both Western and Central Europe, and the primary Asian markets including Australia and Brazil.”

There certainly is money available for taking advantage of new opportunities. Since its $3.5 billion initial public offering in 2009, Hines Global has raised in excess of $900 million for commercial real estate investments. “We are buying and developing multi-tenant assets in the U.S. and around the world,” Donaldson said.

*This story was updated Jan. 9, 2012, at 9:32 a.m. EST to reflect quotes from Hines SVP Edmund Donaldson.