Investcorp Closes $410M Sale of Premier Seattle-Area Microsoft Office Towers

Acting through its real estate group, Investcorp has made a few significant plays this year, and now the company and has just completed the disposition of the 750,000 square-foot Bravern Office Commons in Bellevue, Washington, in a transaction with a client acting under the advisement of Principal Global Investors.

October 19, 2010
By Barbra Murray, Contributing Editor

Acting through its real estate group, Investcorp has made a few significant plays this year, and now the company has just completed the disposition of the 750,000-square-foot Bravern Office Commons in Bellevue, Washington, in a transaction with a client acting under the advisement of Principal Global Investors. The alternative investment products provider and its joint venture partner, Schnitzer West L.L.C. pocketed $410 million on the sale of the two-building office complex, where Microsoft claims every square-foot.

Bravern Office Commons is part of the 1.6 million-square-foot mixed-use Bravern complex occupying six acres in Bellevue’s central business district, 10 miles east of Seattle. Investcorp had joined forces with Schnitzer West in 2007 to snap up the property, just a foundation at the time, and develop it into an office, retail and residential destination at an aggregate investment of $800 million.

Despite having made the acquisition at the height of the real estate market, Investcorp still turned a profit on the sale to the Principal Global client. The transaction, however, involved only Bravern’s office segment–consisting of a 13-story, 250,000-square-foot building and a 23-story, 498,500-square-foot tower–and an adjoining parking facility. “With capital markets and liquidity for core assets being strong, we thought it was a good time to exit,” Herb Myers, a managing director in Investcorp’s real estate group, told CPE. Investcorp is holding onto its ownership interest in the property’s two 29-story luxury residential apartment high-rises, which total 550,000 square feet and feature over 460 units, and the upscale 305,000 square-foot retail segment.

Investcorp has been rather active in real estate over the last six months. In September, the company sold Maritime I and II, Class A office structures accounting for 362,000 square feet in Washington, D.C., to Corporate Office Properties Trust Inc. for $119 million, five years after having acquired the assets in a partnership with Brickman Associates. And in June, acting through Investcorp Real Estate Credit Fund, the company wrapped up the sale of the mortgage note on the 600,000-square-foot U.S. Coast Guard headquarters building to Talos Capital Limited for $89 million, just one year after having acquired the note on the Washington, D.C.-sited property at a deeply discounted $76 million. All told, Investcorp’s three recent dispositions have yielded gross proceeds in excess of $610 million.

But Investcorp’s recent activities have extended beyond the office market. “We found some interesting retail opportunities earlier this year,” Myers said. “We’ve been active on both the debt and equity side.” In April, the company acquired Deerbrook Marketplace, a 348,542-square-foot shopping center just outside of Houston, Texas. During the same month, Investcorp originated a $16 million mezzanine loan secured by the 599,200-square-foot, multi-property Cole Credit Property Trust Retail Portfolio I for Cole Real Estate Investments. “Retail is a sector that we have always been interested in, but we’re also interested in other sectors where investment opportunities arise. We have a multi-asset class investment strategy.”