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RICHMOND, VA-Sun Trust Mid Atlantic headquarters, a three-building 618,000-sf class A office complex. recently traded hands for $75.6 million. Parmenter Realty Partners acquired the property in its Parmenter Realty Fund III.
By all commercial real estate metrics, the property was a good trade for Parmenter; the complex is currently 80% occupied with SunTrust occupying 54% of the space. In-place rents are well below current market rates, giving Parmenter leasing upside opportunities when the leases roll over. Still, though, CBRE Capital Markets, which arranged the $50 million in acquisition financing, found it difficult to place the loan.
This, of course, is a testament to the turmoil in the capital markets over the last several months, Charles Foschini, vice chairman of CBRE | Melody's South Florida office, tells GlobeSt.com. Foschini, along with Christian R. Lee, vice chairman of CB Richard Ellis' Institutional Group, and Christopher Apone, VP of CBRE | Melody's South Florida Office, eventually arranged the financing through Wachovia.
"In current environment finding the financing was extremely difficult--despite the fact that it was a trophy building," Foschini says. "Ultimately the lender that we choose was confident in the execution plan and track record of the borrower and the fundamental qualities of one of the highest profile buildings in the Mid Atlantic."
Located in the CBD of Richmond, the complex consists of the 458,22-sf, 20-story headquarters; the 132,42-sf, 13-story Mutual Building; and the 28,111-sf Davenport building that is leased 100% to Sun Trust Bank, as well as two parking structures. Parmenter is planning several improvements to reposition the property building, according to Andrew Weiss, COO. "We believe this asset will experience a sharp increase in rental rates and corresponding cash flows as the vacant space is leased." Parmenter Realty Fund III held its final close in October 2006. It has deployed more than 50% of its $250 million in capital commitments, according to the firm.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
