Franklin Street Properties To Sell 3 Atlanta Office Towers
Franklin Street Properties Corp. is selling off a chunk of its Atlanta office portfolio.
Crocker Partners is under contract to purchase One and Two Ravinia Drive in Central Perimeter and One Overton Park in the Cumberland/Galleria submarket for $219.5M from the REIT, according to a regulatory filing by Franklin Street.
The sale will leave Massachusetts-based FSP with a smaller Atlanta-area portfolio that still includes 700 Satellite Place in Duluth, the 622K SF 999 Peachtree St. tower and Pershing Park Plaza, the 160K SF office building situated at the split of Peachtree and West Peachtree streets in Midtown.
The move will beef up Florida-based Crocker's Metro Atlanta office portfolio, which includes Cumberland Center II and Paces West, both in the Cumberland/Galleria submarket, Prominence in Buckhead and Regions Plaza in Midtown. A spokesperson for Crocker declined to comment.
FSP originally acquired the pagoda-style office towers One and Two Ravinia Drive, which overlook Interstate 285 in the heart of Central Perimeter, in 2012 for $52.7M and 2015 for $78M, respectively. The 387K SF One Ravinia Drive is 89% leased to 10 tenants, including T-Mobile and Cedar Document Technologies Inc., while the 411K SF Two Ravinia Drive is 69% leased to 38 tenants, according to FSP's annual report with the Securities and Exchange Commission.
FSP purchased the 387K SF One Overton Park for $85.3M in 2006. The 15-story tower is nearly 94% leased with 24 tenants, including staffing agency Randstad USA, Gas South and Carestream Dental, according to the REIT's filings.
In aggregate, the sale price to Crocker is $3.5M more than FSP's purchase prices.
Calls to FSP weren't returned as of press time, but FSP executives said last month that the REIT intended to sell between $350M and $450M of its assets in an attempt to pay down debt and fund dividends.
“FSP will look to pursue additional dispositions of select properties, particularly where we believe that embedded value exists, that may not be appropriately reflected within our current share price and then to utilize such proceeds primarily for the repayment of debt under our revolving line of credit and term loan facilities as well as for any special distributions necessary to meet REIT requirements,” FSP Chief Investment Officer Jeffrey Carter said during a Feb. 17 earnings call.
“The determining factor for FSP on potential dispositions in 2021 will be an assessment of whether a respective property has achieved its near-term valuation objective. We believe that further debt reduction will provide greater financial flexibility and position FSP for stronger shareholder returns.”
According to the REIT's annual report, it had more than $717M in term loans payable as of 2020 and nearly $200M in Series A and Series B senior notes. Carter said FSP expects investor appetite to improve this year as the recovery from the coronavirus pandemic begins. Its stock price closed at $6.52 per share Monday, which is up more than $2 since 2021 began, but down more than 22% since the beginning of 2020.
“I think that the vaccine breakthroughs of Covid give some better visibility to prospective buyers in the marketplace that there is hope again in the market, versus the year last year where there wasn't,” Carter said.
CORRECTION, March 11, 10:30 A.M. ET Franklin Street Properties is under a purchase and sale agreement for the three towers in Atlanta. The actual sale has not yet occurred. Bisnow has updated the story.