09 December 2017

BIGGEST Commercial Office Property Deal In Phoenix Metro Market

State Farm Campus at Tempe Marina Heights Hits A High Record In $928M Sales/Lease Back Deal
Tempe – In what will be the biggest commercial office property sale ever recorded in the Phoenix market, a partnership formed by Transwestern Investment Group (TIG) in Houston, Tex. and JDM Partners LLC in Phoenix (Jerry Colangelo, David Eaton, Mel Shultz, principals) is expected to pay $928 million (roughly $457 per foot) to buy the 2+ million-square-foot Marina Heights office project located along Tempe Town Lake in Tempe.
Information for this post is freely included from an email received two days ago . . . It's a pretty neat sale/lease back deal: You didn't hear it here but word is that some 'silent'  longtime Valley investors provided almost 70% of the estimated $375 million of equity the ownership partnership has in the investment.
A BIGGER chunk of change was kicked-in by Wall Street: More than $500 million of the purchase price is being financed by a consortium of Wall Street investors. State Farm Auto Insurance Co., which occupies all five of the office buildings in the recently completed development, heads up the selling entity in the sale/lease back deal.
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Blogger Note on Sunday 10 Dec 2107: Posting some additional comment excerpts from this article on AZ Big Media https://azbigmedia.com

Marina Heights sold in sale-leaseback deal with State Farm

Above: At last year's RED Awards, Ryan Companies U.S., Inc. won the Developer of the Year Award and its Marina Heights project won the award for best office project. (Photo by Mike Mertes/AZ Big Media)Real Estate | 8 Dec |
Transwestern Investment Group (TIG) announced Corporate Properties Trust III LP has closed on the acquisition of a 2 million-square-foot Tempe property in a sale-leaseback with State Farm Auto Insurance Co. This transaction resembles the acquisition of the 2.2 million-square-foot State Farm campus in Dallas’ CityLine project last fall and the 591,000-square-foot State Farm campus in Atlanta this summer. 
“The closing of the Tempe transaction, the third in a series including Dallas and Atlanta, signals the execution of a strategy State Farm designed as a priority several years ago,” said Larry P. Heard, CEO of the Transwestern family of companies. . .  TIG believes the sale-leaseback structure has benefitted both parties with steady cash flows generated from the long-term lease with State Farm and stable, long-term ownership and management for the tenants.
In the Marina Heights transaction, the legal adviser was King & Spalding and Eastdil Secured was the debt capital adviser.
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The buyer in the sale, which is set to close today, is Corporate Properties Tempe SPE LLC. The member of the buyer is Corporate Properties Trust III L.P., a limited partnership formed by Transwestern and JDM Partners.
The seller is SFSR Marina Heights LLC. The members of that company are: 
According to BREW, Sources say Bill Levine and Andrew Cohn of Levine Investments Limited Partnership in Phoenix are silent partners in the ownership group. Word is the longtime Valley investors provided almost 70 percent of the estimated $375 million of equity the ownership partnership has in the investment. More than $500 million of the purchase price is being financed by a consortium of Wall Street lenders.
Multiple efforts by BREW to reach Levine and Cohn were unsuccessful. 
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The sale eclipses the previous highest price per foot paid for single tenant, class A office space in the Valley. That record was set three years ago when American Realty Capital Properties Inc. in New York City, N.Y. (NASDAQ:ARCP) paid $110 million ($441.47 per foot) to buy the Freeport-McMoRan Center office project in downtown Phoenix.
The 249,000 sq. ft. of office space comprises the top eight floors of a 26-story hotel-office building located at the northeast corner of Central Avenue and Van Buren Street.
The property, with an address of 333 N. Central Avenue, also houses the 242-room Westin Phoenix Downtown.
That sale, which recorded in November 2014, was brokered by Jim Fijan, who has sold $12 billion in Valley investment properties over the past three decades.
“The sale (of Marina Heights) is historic for the price per square-foot, but also for its sheer size,” says Fijan. “The potential for additional large campus transactions in the Metro Phoenix area is strong for all the reasons that the State Farm deal came together: the educated workforce, cost of living and quality of life.”
Marina Heights is along the north side of Rio Salado Parkway about one block west of Scottsdale Road adjacent north of Arizona State University and Sun Devil Stadium.

As part of the purchase, the TIG/JDM limited partnership assumed a 99-year ground lease on the 20.282-acre site, which is owned by the Arizona Board of Regents.
Ryan Cos. and Sunbelt Holdings, co-developers of Marina Heights, completed construction on the project’s fifth and final office structure in April.
The LEED-certified buildings, developed from 2015 to 2017, serve as a regional hub for State Farm Auto Insurance. At full capacity, the company expects to have more than 8,000 workers employed in Tempe.
State Farm, a high-credit tenant, has leased the property for 25 years.
 
The 2.031 + million-square-foot campus includes 1.966 + million sq. ft. of office space and 60,000 + sq. ft. of retail and restaurant space and other amenities, including a Mountainside Fitness, Starbucks and Honor Health facility.
The project features more than 8,000 parking spaces, including below grade, podium, garage and surface level stalls.

The Marina Heights office space is comprised of

DAVIS designed the modern-looking monolithic glass and steel structures.

Transwestern Investment Group (Charles Hazen, pres.) is an investment advisor currently managing $3.4 billion of institutional-grade properties on behalf of its discretionary and non-discretionary investors.
BREW has previously reported the company and its affiliates buying and selling office and industrial buildings in the Valley, and developing multi-family communities in the Phoenix market.
Transwestern Investment Group and State Farm have now completed three sale/lease back deals.
(1) In July of this summer, TIG and South Korean investment manager Mirae Asset Global Investments paid $275.4 million ($466 per foot) to buy a 590,926-square-foot office building State Farm occupies in a suburb of Atlanta, Ga.
(2) In November 2016, TIG and Mirae joined forces in the $825 million ($375 per foot) acquisition of a 2.2 million-square-foot office project leased to State Farm in the Dallas suburb of Richardson, Tex.

The privately-owned JDM Partners has made some significant investments in the Valley with
The company typically syndicates its investments by raising equity from multiple investors.

Last month, BREW reported the company filing a zoning application to develop a nearly 2 million-square-foot mixed-use project called La Via on a parcel in Scottsdale now occupied by the CrackerJax amusement park.
JDM Partners has agreed to pay $80 million to buy that 27.94-acre site in a deal contingent on zoning approval.

BREW has also reported Levine and Cohn involved in numerous Valley real estate investments. The low-profile investors have bought and sold many high-profile, landmark type properties in the Phoenix area as well as other markets throughout the U.S.
Find out more from Hazen at (713) 270-3366.
Reach Schultz of JDM Partners at (602) 224-2312.
Talk to Cohn at (602) 248-8181. 
Call Fijan at (602) 538-3338.
  

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