Parkway Closes $250M Hearst Tower Deal
- Jun 08, 2012
Orlando-based real estate investment firm, Parkway Properties, Inc., announced it has completed the high-profile purchase of Charlotte’s fourth largest office building—the Hearst Tower. Closing on the office property was made possible by the $200 million equity investment promised by TPG earlier this year.
The 972,000-square-foot, 47-story office tower sold for $250 million, or $257 per square foot—a steeply discounted price considering factors such as the tower’s location in Charlotte’s central business district and its high occupancy. The property is 94 percent occupied and has no material expirations prior to 2017; it is expected to generate a net operating income of approximately $17.5 million during the first year of Parkway’s ownership period.
The purchase of Hearst Tower was financed with cash received from TPG, combined with borrowings on the company’s credit facility. While the property is currently unencumbered, Parkway expects to obtain financing on it to provide capital for future investment opportunities.
As previously reported, the Hearst tower was sold to Parkway by Bank of America as part of its nationwide cost-cutting strategy. Bank of America will, however, enter a lease agreement with Parkway for 322,000 square feet through March 2022.
Parkway Properties is a self-administered real estate investment trust specializing in ownership of specialized office properties in higher-growth submarkets in the Sunbelt region, owning or having interest in 42 properties for a total of 10.7 million square feet of leasable space.
TPG is a leading global private investment firm founded in 1992 with $51.5 billion of assets under management and offices in major global markets.
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