The $38.4-million purchase price includes: three two-story tilt-up office buildings totaling 220,000 rentable sf that are net leased to IBM; one vacant three-story office building (about 115,000 sf); one small warehouse building (about 30,000 sf) that also is vacant, and; 31.8 acres of developable land that local sources have said could hold another 500,000 sf of flex-office product.
According to the 8K Wells filed with the SEC on Friday, it paid $9.4 million for the developable land, $29 million for the buildings. The properties' pro forma rental income through the first half of 2003 was $1.6 million, not including $1.1 million in tenant reimbursement for operating costs. Pro forma net income through the first half of 2003 was $741,000, according to the filing. The properties' 2002 pro forma rental income was $3.2 million, not including $2.1 million in tenant reimbursement for operating costs. Pro forma net income in 2002 was $1.5 million.
Brad Fletcher and Dave Squire, both managing directors of the Portland office of Grubb & Ellis, represented IBM in the transaction. They declined comment on any specifics, citing confidentiality agreements. "The office buildings and land component represent one of the most significant opportunities in the marketplace," Fletcher tells GlobeSt.com. "I am certain it will be an excellent investment for Wells."
The buildings and land are located in what is known as Woodside Corporate Park, across from Nike's world headquarters. The addresses of the three buildings IBM has leased back on separate leases are 15300 SW Koll Parkway, 15350 SW Koll Parkway and 15400 SW Koll Parkway. The terms of the leases are staggered between five and 10 years, according to local sources familiar with the transaction. The addresses of the other two buildings are 1345 SW Burlington Dr. and 15757 SW Jay St.
Wells Management Company Inc. will manage the IBM Portland Buildings on behalf of Wells OP. Wells Management will be paid asset and property management fees of up to 4.5% of the properties' gross revenues.
In August, Wells said it is looking to spend $200 million on class A office product in the Pacific Northwest by the end of the year. At that time, Wells director of northern region acquisitions Clay Adams told GlobeSt.com that despite one of the highest unemployment rates in the nation, Portland has good potential thanks to strong firms such as Intel, Nike and IBM Sequent and restraints on new development such as the urban growth boundary and strong environmental laws. "Portland has just started to turn the corner a little bit," he said.
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