CCIT Acquires $202M of Net Lease Office Properties

Cole Capital, the private capital management business of Cole Real Estate Investments, Inc., announced that it had acquired five single-tenant corporate properties by Cole Corporate Income Trust, Inc. (CCIT) for a combined price of approximately $202.1 million. The properties include facilities in San Jose, Colorado Springs, St. Louis and Houston and are now part of Cole's office portfolio, which consists of 63 wholly owned properties located in 25 states, totaling approximately 11.6 million square feet with an aggregate purchase price of approximately $1.7 billion.

"These latest acquisitions are consistent with CCIT's strategy of securing mission-critical properties nationwide that are essential for corporate operations," says Thomas W. Roberts, EVP and head of real estate investments at Cole Real Estate Investments, Inc. in a GlobeSt.com article. "These 'necessity' properties boast credit-quality tenants, long-term leases, valuable rent increases and varied industries, while providing geographic diversification to the expanding CCIT portfolio."

The new acquisitions include:

LATTICE SEMICONDUCTOR CORPORATION – San Jose, CA MSA
CCIT acquired a 98,874-square-foot two-story, Class A office building leased to Lattice Semiconductor Corporation. The facility serves as a development center and product design facility for Lattice, and activities at the property include research and development, as well as prototype product manufacturing and testing. There are approximately 12.9 years remaining on the initial lease term, plus a renewal option.

FEDEX CORPORATE SERVICES – Colorado Springs, CO MSA
CCIT acquired a 155,508-square-foot three-story, Class A office building leased to FedEx Corporate Services, Inc., with a guaranty from FedEx Corporation. The property is the primary facility used by FedEx for the development and programming of various technologies that the company uses to route and track its delivery services. The lease has approximately 11.0 years remaining, plus renewal options.

SERVICENOW – San Jose, CA MSA
CCIT acquired a 148,866-square-foot three-building office complex leased to ServiceNow, Inc., a leading provider of cloud-based services that automate enterprise IT operations. The property serves as an operations facility for ServiceNow with an emphasis on research and development, as well as corporate functions. There are approximately 10.4 years remaining on the initial lease term, plus renewal options.

MAGELLAN HEALTH SERVICES – St. Louis, MO MSA
CCIT acquired a 232,521-square-foot three-story, Class A office building leased to Magellan Health Services, Inc. Magellan uses the property as a national technology, administrative and customer care center, and it is the main corporate location for the entire company's marketing, printing, production and mail operations. There are approximately 11.2 years remaining on the initial lease term, plus a renewal option.

TGS-NOPEC GEOPHYSICAL COMPANY – Houston, TX MSA
CCIT acquired a 97,295-square-foot three-story, Class A office building leased to TGS-NOPEC Geophysical Company. TGS-NOPEC Geophysical Company is a geophysical mapping company serving the oil and gas exploration and production industries. The property serves as TGS-NOPEC's headquarters for U.S. operations, as well as the home office for the global CEO. The lease has approximately 11.9 years remaining, plus renewal options.

For more news and information visit Blumberg Capital Partners.

Cole Picks Up Hillshire HQ in Chicago

Cole Real Estate Investments announced this week that it had acquired the headquarters for The Hillshire Brands Company in Chicago for $97.5 million. The sale of the 230,000-square-foot building at 400 S. Jefferson Street is the highest price per square foot for a Chicago office building since the beginning of 2012 according to a Crain's Chicago Business article. Terms of the deal and representatives of the entities in the transaction were not disclosed.

"The Cole philosophy for single-tenant acquisitions remains consistent: we look for high-quality, income producing commercial real estate in strong markets, leased to creditworthy tenants under long-term leases," Boyd Messmann, Cole's senior vice president of office and industrial acquisitions, told Commercial Property Executive. "The Hillshire Farms headquarters property fits our criteria."

Sterling Bay Companies reportedly bought the empty 233,869-sq.-ft. building in 2012 for $10 million, and spent about $50 million to build-out the property for the Sara Lee spinoff firm. All of the infrastructure and building components were completely redone with Hillshire's build-out of the property, and windows were added on all four exposures, expanding the amount of natural light.

"The risk on a 230,000-square-foot building is not that great, but they hit a home run," said J. Paul Beitler, a veteran developer of Chicago office towers who is not involved in the deal. "This one happened to work out extremely well. For every one of these there are 10 that don't. My hat's off to them. They had a vision that no one else had, they executed on their vision, and they absolutely hit a home run. Their investors are going to make a lot of money."

For more news and information visit Blumberg Capital Partners.

REISA Panel on Non-Traded REIT Industry

REISA's Spring Symposium met this month with nearly 600 in attendance, featuring an opening session panel, "Liquidity in Non-Traded REITs: Insights from Industry Leaders," with industry leaders American Realty Capital, Cole Real Estate Investments, Inland Real Estate Corporation, and CNL Financial Group. The main message, as noted by CoStar, was that "non-traded REITs need to continue to implement best practices to reduce fees, improve transparency and bring more investors to the industry. Job one will be unlocking shareholder by making good on the $39 billion in liquidity events being considered by companies in the non-traded REIT space." The panel featured Nicholas Schorsch, chairman and CEO of American Realty Capital, Marc Nemer, president and CEO of Cole, Andrew Hyltin, group president, fund management of CNL, and Daniel Goodwin, chairman and CEO of Inland.

"The non-traded REIT industry has generated a tremendous number of headlines in recent months on a number of fronts, particularly as several offerings have or are pursuing liquidity events," said REISA Executive Director John Harrison. "Non-traded REITs are increasingly popular investment vehicles and account for more than $80 billion in assets under management – as these offerings transition from illiquid to liquid investments, they are shaking up the investment real estate world. These industry giants will share their insights on this increasingly important issue to investors and their financial advisors."

"The public markets believe in non-traded REITs. Tomorrow's public companies are coming from this room," said ARCP's Schorsch. “We sit here together on this panel with close to $30 billion of assets that are going to look for liquidity. The bigger the market, the more efficient the transactions."

The Real Estate and Investment Securities Association is a national trade association serving alternative investment and securities industry professionals since 2003, with over 1,200 members who are key decision makers that represent over 30,000 professionals throughout the nation.

For more news and information visit Blumberg Capital Partners.

Cole Buys New Encana Office Tower for $120M

Cole Real Estate Investments announced this week that it had acquired a newly built Class A office tower in Plano, Texas that was completed earlier this year for $120 million. Cole was represented by Boyd Messmann, senior vice president of acquisitions, office and industrial, in the transaction. Gary Carr, vice chairman in the Dallas office of CBRE Group, brokered the sale. "We didn't widely market the property," Carr said. "There was a tremendous amount of interest because of the quality of the tenant, building and location."

"This latest transaction further illustrates our active portfolio management strategy," said Thomas Roberts, executive vice president and head of real estate investments for Cole Real Estate Investments. "Available proceeds from recent property sales are being invested in a high-quality asset under a long-term lease, providing a strong yield and enhancing portfolio diversification. Those factors, combined with the strategic importance of this facility, attractive location and recent construction, make this an ideal investment while adding a prominent energy sector organization to our growing roster of diversified tenants nationwide."

Located in the Legacy Business Park in Plano, TX, Cole's newest acquisition sits at 5851 Legacy Circle. The 318,600 square foot, 12 story office tower is 100% leased to Encana Oil & Gas Inc., a leading North American energy producer, and serves as the regional headquarters for their Texas and Louisiana operations. The property includes a seven story parking structure, attached by a sky bridge. In May, investor KBS Real Estate paid $113 million, or about $217 per square foot, for three Legacy Town Center office buildings, according to a Dallas Morning News report.

For more news and information visit Blumberg Capital Partners.

City Center Plaza in Bellevue Sold for $375M

CommonWealth Partners, a fully integrated private real estate investment, development, management and operating company based in Los Angeles, California, has purchased City Center Plaza in Bellevue, WA for $374.7 million, or roughly $655 per square foot. According to a Seattle Times article, the purchase price is the highest ever on the Eastside and similar to what Amazon.com is paying Vulcan Real Estate for its 11-building South Lake Union office complex. Cole Real Estate Investments sold the 583,000 square foot office tower on behalf of Cole Credit Property Trust III, Inc. The trust had purchased the property in July 2010 for $310 million from Beacon Capital Partners of Boston.

"When our experienced real estate team brought this opportunity to us in the summer of 2010, despite industry naysayers, we felt this acquisition would be an excellent fit for our growing portfolio of mission-critical corporate properties," said Marc Nemer, Cole's president and chief executive officer. "Today, not only have we seen a 21% increase in the property's value, but we were able to deliver a return of 38% on the equity invested, creating significant value in the portfolio for the benefit of our shareholders."

Located at 555 110th Avenue NE, City Center Plaza was completed in 2008 and designed by Zimmer Gunsul Frasca Partnership. The 26-story Class A office tower serves as the headquarters for Microsoft Bing, which occupies 96.3% of the building.

For more news and information visit Blumberg Capital Partners.

Sysmex Corporate Center Sold in September to Cole

An affiliate of Cole Real Estate Investments purchased Sysmex Corporate Center, a 162,739-square-foot office property in Lincolnshire, for $49.7 million, free and clear of existing debt.. HFF represented the sellers, Bridge Development Co. and Globe Corp., in the transaction. The sales price breaks down to about $307 per square foot according to a GlobeSt.com article.

Completed in 2010, the Class A facility at 577 Aptakisic Rd. in Lincolnshire, IL, is fully occupied and triple-net leased to Sysmex American Inc., for its North and South American headquarters. The company develops and sells clinical laboratory equipment. The lease is guaranteed by Sysmex Corporation, a Japan-based company that is principally engaged in the health care business and is publicly traded on the Tokyo Stock Exchange.

For more news and information visit Blumberg Capital Partners.

Cole Acquires 8 Sylvan Way for $53M

Cole Real Estate Investments (Cole), on behalf of its HPFVI fund, announced this month that it had acquired 8 Sylvan Way, a 176,000 square-foot office property in Parsippany, NJ, for $53 million in an all-cash deal. The Hampshire Companies sold the property in a deal brokered by CBRE. The Hampshire Companies redeveloped the property in 2009, including a new design by the architectural firm HLW, and repositioned the property as one of Morris County's leading "trophy quality" office buildings according to an article from The Paramus Post.

"With the location of the property, long remaining lease term, scheduled rent increases and desirable corporate headquarters, this acquisition corresponds with our overall conservative, disciplined investment strategy," said Robert Micera, chief investment officer, office and industrial, for Cole. "The Morris County, New Jersey, office submarket boasts great fundamentals, considering its strong economic base and educated workforce, and we are pleased to add The Medicines Company headquarters to our growing portfolio of corporate real estate."

The property serves as The Medicines Company's global headquarters with approximately 12 years remaining on the current lease term, with two five-year renewal options. The Medicines Company is a global pharmaceutical company focused on advancing the treatment of critical care patients in a hospital setting.

For more news and information visit Blumberg Capital Partners.

Cole Real Estate Buys Phoenix Office Complex for $170M

In a sale-leaseback transaction, Cole Real Estate Investments has acquired Apollo Group's University of Phoenix office complex for $170 million according to a CoStar report. Apollo Group signed a 20-year lease with Cole; the deal requires Apollo to keep the company's corporate headquarters in the building for at least the next 20 years. The 20-year, triple-net lease expires in 2031. "It's a 20-year lease with five-year renewal options," Apollo spokesman Manny Rivera said. "So, the sale of the Riverpoint complex is pretty much a business transaction that allows Apollo to diversify our real-estate portfolio and really just to focus on our mission to provide quality education."

The Riverpoint complex covers three mid-rise office towers with roughly 600,000 square feet, including two parking structures. The facility was constructed from 2006 to 2007 and is located two miles south of Phoenix Sky Harbor Airport and four miles southeast of the Phoenix central business district.

"This sale-leaseback transaction is a strong fit with Cole's core investment strategy of acquiring high-quality, income-producing real estate, leased to creditworthy, industry leading businesses under long-term leases," said Thomas Roberts, executive vice president and head of real estate investments for Cole. "As a key, strategic operation for Apollo Group and University of Phoenix, the Riverpoint complex is a premier asset to add to our growing portfolio of corporate real estate."

For more news and information visit Blumberg Capital Partners.