"The Saint Paul office market has seen, over the past six to seven years, a dramatic growth in occupancy, rental rates and values," says Bill Morin, the port's director of real estate. "And we were able to take advantage of that growth in value to the benefit of our bondholders."
Since the "future real estate market is difficult to predict," Morin says the sale is in the range of what the net present value of future cash flows could be.
The sales price of $73 per sf is comparable to other sales of Downtown office property, he says. For instance, the NCL Tower recently sold for a reportedly $30 million, or $64 per sf.
The Piper Jaffray Plaza building, located at 444 Cedar St., has a 10%-vacancy rate.
The port's board of commissioners approved the sale of the building Tuesday to United Properties and MOT Partners, whose general partner is Fred Brownson, which remained fee owners of the building after the port took control of it in 1991. The partnership paid the $1.2 million and transferred title of the Town Square parking ramp to the port as part of the transaction. The Piper Jaffray ramp was not part of Tuesday's building sale.
The sale proceeds will be returned to the 876 Fund, as the port does will all property managed for the bond fund.
The port took possession of the office building adjoining NCL Tower and Town Court in 1991 after the developers were unable to lease half the space with office tenants and they, themselves, suffered from cash flow problems. The following year, the port registered a $16.3-million loss on the mortgage, reducing the building's book value to $5.7 million.
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