The properties involved in the deal are: Cascade East and Cascade West, twin office buildings that each have about 150,000 sf of leaseable space; the Atrium Building, a four-story, 118,000-sf building, and; The Commons, a 25,000-sf retail property. All of the properties are located in the 20800 block of 72nd Avenue South, within CenterPoint Corporate Park, a 46-acre, eight-building development that the Boeing Co. sold to Intracorp and Rockwood in 1999 for $40.6 million.
After refurbishing the buildings, Intracorp and Rockwood sold three properties known as the Creekside buildings to Maryland-based AFL-CIO Building Investment Trust for $30 million in early 2002. Another building in the park is owned by Boeing Employees' Credit Union. The buildings G REIT is buying have a combined occupancy of about 68%, but most of the vacancy is in Cascade West, which is about 30% leased.
Bill Pollard and Stuart Williams of Pacific Real Estate Partners Inc. in Bellevue are representing the owners in the sales negotiations with Triple Net. They also have had the leasing assignment. Williams tells GlobeSt.com that Cascade West has all the availability simply because they began leasing them up in a certain order and only recently began focusing on Cascade West. He describes Cascade East and West as two of the best buildings in the submarket. Triple-net asking rental rates for the three office properties are $14 per sf per year. The retail building is fully leased to a daycare operation and a bakery.
The "G" in G REIT stands for government, as the REIT focuses on buildings with long-term government tenants as anchors. Triple Net Properties analyst Ross Parkin says that about 16% of the space in the three office buildings is leased to government tenants, including the Washington State Department of Revenue and a federal government agency. Other tenants include: Messier-Dowty (landing gear design), Alaska Airlines, Kraft Foods, 7-11 Corp., United Airlines, Kelly Services, Noridian Mutual Insurance, Cohesion Marketing and Patient Accounting Service Center.
G REIT is financing the acquisition through its line of credit with LaSalle Bank, which is a three-year loan with two one-year extensions. "We'll continue to lease up the properties and either refinance the debt or sell the property," says Parkin.
In mid-August, GlobeSt.com reported that G REIT acquired the 130,805-sf North Pointe Corporate Center in suburban Sacramento for $24.2 million. The 95%-leased property is 68% occupied by the Internal Revenue Service. Quest Education Corp., a division of Kaplan Inc., leases another 14% of the building. At the time of the sale, Triple Net Properties told GlobeSt.com it will manage the property for a fee equal to 5% of the gross income of the property in addition to compensation for property-level services, including leasing fees, loan origination and servicing fees and property tax reduction fees.
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