The larger of the two properties acquired is Loop Central, a 575,000-sf three-building complex located in the Galleria submarket of Houston. The property is 83% leased, which equates to 90,000 sf of available space. Tenants include Litton Loan Servicing, Universal Ensco, HHS Texas Management and the University of Phoenix. The sellers were Whitehall and Lincoln Properties
The other property, Crescent Center, is a 339,000-sf nine-story office building in Memphis that is 97% leased. Tenants include Wachovia, Goldman Sachs, Perkins Restaurants, Butler Snow & O'Mara, Stanford Financial and FedEx Trade Networks. IPC says the building is the premier address in the city and commands the highest rental rate. The seller was the Arkansas State Teachers Association.
The acquisitions, first reported in late September, were funded with an $89-million finaning from Bank of America that came in the form of two fixed-rate 10-year loans at an interest rate of about 5.2%. The balance was funded from IPC's acquisition line of credit. Seller information was not made available by IPC and was not otherwise immediately available.
IPC US REIT has an ownership interest in 11.3 million sf in 39 buildings. The REIT gives shareholders an 8% per annum return on their investment, says Goodman. In the case of these acquisitions, that is being achieved by buying at a 7% capitalization rate and borrowing 69% of the money for the acquisition at a 5% interest rate, says Goodman.
Last week , IPC, which has been focusing in on the office market, signed an agreement to sell five of its six remaining retail complexes totaling 780,000 sf for $94 million. This transaction is expected to close in the fourth quarter.
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