Wells REIT II Closes on 431,000-SF Office Tower

WINSTON-SALEM, NC-One of the largest buyers of office and industrial space in the nation over the past two years closed last week on its acquisition of the newest Downtown office development here for $180 per sf. According to local sources, Wells Real Estate Investment Trust II paid $77.7 million for One West Fourth Street, a 431,000-sf office building located directly across from the headquarters of RJR Tobacco and the local courthouses. Built in 2002, the 13-story class A asset is 92% leased. Wachovia Bank and the law firm Womble, Carlyle, Sandridge & Rice lease a combined 86% of the building under long-term leases. A source familiar with the building tells GlobeSt.com the two tenants have at least 12 years left on each of their leases, and that the aggregate value of those leases exceeds the purchase price by a healthy margin. Wells’ senior vice president of acquisitions Tom Hallowell spoke to GlobeSt.com about the purchase. He declined to confirm the financial details of the transaction, but says the company was attracted to the asset based on its combination of creditworthy tenants, long-term leases, central location, and nearly new asset quality. Additionally, Hallowell says Wells had been looking to add property in North Carolina, were it did not yet have a significant presence. The average asking rate for new leases in the building is $20- to $24 per sf, he says.The seller of One West Fourth Street is listed as Magnolia One Partners LLC. There were no brokers involved in the transaction.One West Fourth Street is the ninth property acquisition for Wells REIT II, which now totals about $570 million in assets under management. Its acquisitions focus on existing class-A office and industrial properties, as well as corporate sale-leasebacks and build-to-suit projects, leased long term to creditworthy tenants. Wells was the largest purchaser of class-A office and industrial real estate in 2002 and 2003, according to New York-based Real Capital Analytics.