Parkway Properties Plans Atlanta Office Purchase
- Dec 28, 2010
December 28, 2010
By Barbra Murray, Contributing Editor
The office and retail portion of the Sovereign, an upscale mixed-use high-rise in Atlanta’s tony Buckhead area, is about to be snapped up by Parkway Properties Inc.’s Parkway Properties Office Fund II L.P. Fund II is under contract to acquire Sovereign’s commercial segment for $167.3 million from Regent Partners L.L.C., which developed the 50-story tower in 2008 at a cost of $250 million.
Designed by the architectural firm of Smallwood, Reynolds, Stewart, Stewart & Associates, Sovereign’s commercial section carries the address of 3344 Peachtree Road and encompasses approximately 470,000 square feet of office space on 18 floors and 20,000 square feet of retail space. While the acquisition agreement does not include the skyscraper’s 82 luxury residential condominiums that occupy 23 levels atop the office space, it does encompass an adjacent 11-story parking facility. The commercial space is 93 percent leased with a 26-business tenant roster featuring the likes of Barclays and commercial real estate services firm Jones Lang LaSalle, which marketed 3344 Peachtree on behalf of Regent.
As per terms of the agreement, Fund II will make a $160 million investment that will include the assumption of existing debt on the property in the form of a $90 million non-recourse first mortgage loan with a fixed interest rate of 4.75 percent and a maturity date in October 2017. Parkway Properties L.P. will supply the remaining $7.3 million of the purchase cost.
The Sovereign transaction, scheduled to reach completion in January 2011, marks one of the largest office sale agreements in Atlanta this year. Dewberry Capital Corporation’s acquisition of the Class a 446,600 square-foot Campanile Plaza from Wells Fargo for $36 million was a high-profile deal but the purchase price paled in comparison to the 3344 Peachtree deal.
Next year is expected to bring more good news for sales volume in Atlanta. “The next several quarters should also see a noticeable increase in investment activity,” JLL noted in a third-quarter report. “As new pricing guidelines are established, those investors eager to place money should have many opportunities to buy well-located, quality office buildings, potentially at a discount.”