Parkway Properties Exits Central Perimeter, Sells 7000 Central Park to CBRE Global Investors
Fresh from it sale of Atlantic Station's retail village, CBRE Global Investors is buying in Atlanta again, this time in Central Perimeter.
The investment arm of CBRE is under contract to buy 7000 Central Park, the 415k SF tower in the luxe Atlanta submarket for $85.3M from Parkway Properties, sources tell us. Officials with the buyer, Parkway, and with Cushman & Wakefield, which brokered the sale, did not return calls seeking comment. The news comes the same day that Parkway CEO Jim Heistand told analysts during an earnings call that the firm was ready to sell its 40% interest in the tower to an unnamed buyer, with expectations to close by year's end. The deal will mark Parkway's official exit from the Central Perimeter office submarket, which has been planned, as we previously reported here. CBREI also owns Three Ravinia Drive in Central Perimeter.
After buying 7000 Central Park's $56.6M note in 2013, Parkway subsequently foreclosed on the property at a time when its occupancy was 77.5%. "Since acquisition, we completed approximately 138k SF of leasing and increased the property lease percentage to 86.3%," Jim (center with Parkway's Mike Fransen and C&W's Joe Peddie) told analysts. "We believe it is an opportunistic time to exit the asset. Upon the completion of this sale, as well as the recent dispositions of Two Ravinia and Peachtree Dunwoody Pavilion, we would have successfully exited the Central Perimeter submarket in time of unprecedented investor demand."
Parkway execs also highlighted the firm's acquisition of Two Buckhead Plaza last month for $80M and a 6% cash cap rate. More than 95% occupied, Parkway assumed a $52M first mortgage note on the property, which matures in October 2017. Jim says with Two and One Buckhead Plaza, Parkway controls 2M SF—or 13%—of the Buckhead office market. "We believe we can unlock value by owning both One and Two Buckhead as the assets have never been owned before by the same way," he says. Plus, Jim hints that the firm could push up rents at Two Buckhead Plaza, given recent deals there are 12% below the rents at the sister property.
Parkway COO Jayson Lipsey (right with Parway's David O'Reilly and John Barton) told investors that the firm is seeing "significant rent growth" in most of its markets, save Houston. "In places like Tempe and Austin and Atlanta, the rent growth has been substantial," Jayson says. "So I think that we remain optimistic that we are going to be able to continue to push rates in light of relatively muted new supply."