Area construction industry estimators tell GlobeSt.com the price was still below estimated replacement costs today of about $200 per sf.
"The opportunity to acquire well-leased, quality office buildings significantly below replacement cost in a fundamentally strong sub-market appealed to us," Peabody Chairman Jerry O'Connor says in a prepared statement.
"From a portfolio perspective, it was attractive to add a property where over 70% of the total projected yield is generated by annual cash flows," O'Connor says.
In the same statement, Ralph Edwards, chairman and CEO of EdwardsDay, says the deal is a continuation of the company's "strategy to acquire class A assets in supply-constrained markets with institutional partners."
The seller was YCP Alhambra LP, an investment partnership advised by Lend Lease Real Estate Investments Inc. of Atlanta.
The two properties are known as the Alhambra, not to be confused with the nearby, separately owned Alhambra Towers.
EdwardsDay is a privately owned real estate investment firm. The Peabody Global Real Estate Fund is a real estate opportunity fund sponsored by J.W. O'Connor & Co. and J.P. Morgan & Co., both of New York.
The capitalization rate for the transaction is a little less than 10%.
The two buildings, in Coral Gables' central business district, total 317,288 sf, with the Alhambra Plaza having 224,699 sf, and Alhambra West being 92,589 sf.
The Alhambra Plaza is 92%-occupied; Alhambra West is 88%-occupied. Major tenants in the buildings include the Prudential Insurance Co., Morgan Stanley Dean Witter, Restaurant Services Inc., Freedom Magazines, Yahoo! and People Soft USA.
The Alhambra Plaza was built in 1987, while Alhambra West was built in the early 60s and was totally renovated in 1987.
The Miami and Boston offices of Holliday Fenoglio Fowler LP arranged the $9.5 million equity joint venture on behalf of EdwardsDay and secured $45 million in senior debt financing from Wachovia Securities for the partnership.
Paul Stasaitis, senior director of Holliday Fenoglio Fowler's Miami office, led that company's involvement in the transaction. Randy Evans of the Atlanta office of New York-based Eastdil Realty represented the seller.
"The joint venture married the financial resources and deal savvy of the Peabody Fund with the office investment expertise of EdwardsDay," Stasaitis says in a prepared statement.
The Alhambra Plaza and Alhambra West make up the office component of he Alhambra mixed-use complex in Coral Gables. Each building has a connection to the adjoining Hyatt Regency Hotel.
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