Rubicon-NGP JV Buying 3M-SF GSA Portfolio for $479M

SYDNEY-Locally headquartered Rubicon America Trust and Washington, DC-based NGP Capital are under contract to acquire about 3 million sf in 13 office buildings and one distribution center that are 93.8% leased to the federal government and 98.6% occupied. RAT, which currently owns only five buildings, will have an 81% interest in the assets and NGP will hold the remainder. The purchase price is $479 million. The acquisition is scheduled to close sometime today. After the acquisition, the Trust will include 18 properties worth approximately A$621 million located throughout the US and derive over 76% of its income from US Federal Government tenants. “The GSA Portfolio provides a rare opportunity to acquire 14 properties leased almost exclusively to the US Federal Government, in one transaction,” says Rubicon Group managing director Gordon Fell in a prepared statement. ” The acquisition of the GSA Portfolio will transform the trust in terms of diversification, scale and security of income stream.”Bruce Batkin, the New York-based president of the Greenwich Group International, exclusive asset manager of the trust, says the trust went after the GSA portfolio because of the tenant credit quality, the GSA historic propensity for renewing leases, and the infrequent availability of such portfolios. He adds that the trust joint ventured with NGP because owning GSA-leased buildings requires specific expertise and NGP is a major owner of GSA-leased properties nationwide.The purchase price represents an initial yield of 7.6%, according to RAT. A 10 year debt facility of US$389 million at a fixed interest rate of 5.46% per annum was arranged by the joint venture. The weighted average lease expiry of the GSA portfolio is 6 years based on income, according to RAT. The industrial property totals 1.04 million sf and is located in Burlington, NJ. The office properties are located in Aurora, CO(116,500 sf); Lakewood, CO (82,845 sf); Norfolk, VA (53,830 sf); Suffolk, VA (351,075 sf); Sacramento, CA (327,595 sf); San Diego, (144,327 sf); Concord, MA (104,527 sf); Houston(138,000 sf); Huntsville, AL (135,746 sf); Kansas City, KS (203,475 sf); Philadelphia (88,717 sf); Providence, RI (130,600 sf); and Washington, DC (162,038 sf).