Metro Charlotte asset boasts solid tenant rosters and offer strong cash on cash returns
Atlanta-based OA Development (OA) acquired The Park-Huntersville (The Park) for $62.5 million, marking the company’s largest acquisition to date. The five-building Class A portfolio is competitively located in the heart of the North Charlotte submarket and is the largest multi-story suburban office portfolio in the supply-constrained Northeast/I-77 corridor. The multi-story office portfolio is part of a larger master-planned commercial park with more than 3 million square feet of office, industrial, flex, retail, medical, and soon-to-be hospitality properties. The Park’s purchase price of $158/square foot is below replacement cost estimated to be $230-245/square foot.
“The Park-Huntersville aligns with our successful investment profile,” said Brian Granath, OA partner. “This acquisition speaks to OA’s unconventional thinking, knowledge of suburban markets, and commitment to see a deal through to closing – and, as a result, our ability to consistently offer investors exceptional returns.”
The 395,796-square-foot asset is 91.4 percent occupied, institutionally maintained, and comprised of regional, national, and international companies from a wide array of industries – including business services, healthcare, technology, and manufacturing. Currently 34 percent of the tenants maintain investment grade credit with nearly 4.42 years of average weighted remaining lease term, and rents presently sit at 14.1 percent below market place rents. The property – which has been exceptionally well maintained by the original owner – has experienced positive leasing momentum with more than 60,000 square feet of new leases and renewals in the last two quarters. The Spectrum Companies will retain leasing and management of the buildings and property, which it has provided for The Park for more than 30 years.
HFF marketed the property on behalf of the seller, U.S. Trust – Bank of America, N.A., as Trustee, and procured the buyer, OA. The HFF investment advisory team representing the seller consisted of senior managing director Ryan Clutter, senior director Scot Humphrey, and director Chris Lingerfelt.
“With this transaction we have now completed the sale all of the existing office and industrial buildings in The Park–Huntersville with the first of the four transactions closing less than 10 months ago,” added Clutter. “All four offerings experienced significant interest, which is a testament to the quality of the park and the appeal of the Charlotte market. We believe investment capital is going to continue to aggressively seek Charlotte opportunities throughout 2018.”
Patterson Real Estate Advisory Group (Patterson) arranged the acquisition financing with Principal Real Estate Investors based in Des Moines, Iowa.
“OA has been a long-time client of our firm, and we are thrilled to see them expand their platform into Charlotte,” said Lance Patterson of Patterson. “The deal was received favorably by the debt capital markets and resulted in a very competitive debt process.”
The Park is in close proximity to UNC Charlotte, Central Piedmont Community College, Queens University, and Davidson College, which offers a well-educated labor pool for the expanding economy. The Park is just minutes from the Lake Norman area, which is a preferred residential and vacation location for executives. Cushman Wakefield noted in its Q3 2017 Charlotte report that the market’s robust growth ranks third nationally for markets with more than 1M employed, which has pushed unemployment rates down to 3.8 percent. Suburban lease rates have increased by 6 percent since the end of 2016, and construction of new, competitive product moves forward at a slow, halting pace. The report states that vacancy in the suburbs will most likely “decrease over the next year to due to the combination of high demand and constricted speculative construction.”
This is the 19th commercial property that OA has acquired in the last nine years, bringing the company’s total square footage acquired to 2.8 million square feet.
OA Development
OA Development brings a unique way of looking at the marketplace that delivers consistent returns to investors. That is why OA Development’s clients have trusted the firm’s insights since 1993. OA Development’s long-time leadership possesses the experience, expertise, and orientation to protect and grow investors’ assets in the rapidly changing commercial real estate market. Such foresight has helped the firm remain ahead of the market at each turn and produce an enviable track record.
About HFF
HFF and its affiliates operate out of 26 offices and are a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates, offers clients a fully integrated capital markets platform, including debt placement, investment advisory, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing. HFF, HFF Real Estate Limited, HFF Securities L.P. and HFF Securities Limited are owned by HFF, Inc. (NYSE: HF). For more information, please visit hfflp.com or follow HFF on Twitter @HFF.
About Patterson Real Estate Advisory Group Patterson Real Estate Advisory Group is a capital placement and real estate finance advisory firm that represents owners, developers and investors seeking capital to leverage commercial real estate opportunities. Patterson arranges construction, bridge, mezzanine and permanent financing while also coordinating equity and joint venture formations along with general finance advisory work. The primary focus is helping clients across different property types access investors at a variety of different levels of the capital stack, matching the specific need with the appropriate capital provider.