In a prepared statement, Steven G. Rogers, the REIT's president and CEO, says he factored in $2 million in closing costs, anticipated first-year capital expenditures and leasing commissions into the $40-million contract. That would bring the effective per-sf price of the 20-acre property to $115.
Parkway is funding the acquisition with proceeds from the tax-deferred sales of the BB&T Financial Center in Winston-Salem, NC on Aug. 1 and with proceeds from a new common stock issue on March 24, 2003, Rogers says.
"Based on current occupancy, the property is expected to produce an initial unleveraged yield or going-in cash capitalization rate of approximately 9% in the first 12 months of operations," Rogers says.
The campus is near GA 400 and Interstate 285 and is adjacent to the Medical Center MARTA station. The property has 1,157 surface parking spaces. Two of the buildings were constructed in 1976 and two in 1980 with more than $2 million in capital upgrades since 2000, Rogers says.
The buildings are leased to 24 tenants. Three tenants--Cox Communications, AutoTrader.com, a subsidiary of Cox Communications, and Beazer Homes--occupy about 50% of the campus.
In a website report, Rogers says, "After reportedly the worst office and industrial real estate year in memory, the Atlanta market is poised for recovery. Nonetheless, uncertainty over our national economy will impact any project improvement."
"The bright spot is the continued expectation of approximately 17,000 jobs this year which, if realized, will replaced approximately half the jobs lost in 2002," he adds. "At mid-year 2003, market conditions in Atlanta are showing signs of improvement … Atlanta remains a highly desirable business center."
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