(Carl Cronan is editor of Real EstateFlorida.)
ST. PETERSBURG, FL-CNL Commercial Real Estate has purchased the 17-story Wachovia Plaza office building from Parkway Properties Inc. for $26.3 million, or roughly $140 per sf. This is CNL's third commercial acquisition since the start of this year, having bought other office properties in the Orlando and Tampa markets.
Paul Ellis, president of Orlando-based CNL Commercial Real Estate, says it was able to buy the 185,674-sf landmark in Downtown St. Petersburg because of its ability to secure financing in a tighter credit market. He notes that the building fits well with its strategy of buying well-located assets at favorable prices.
"Sellers are looking to select buyers that have a high certainty of closing on assets," Ellis tells GlobeSt.com. "CNL has a long track record of being able to buy during tough times. You see a lot of people out there trying to get deals done, but not actually getting to closing."
Despite upward pressure on cap rates, which Ellis estimates increasing by almost a full percentage point this year, he says CNL was able to get Wachovia Plaza at just above 40% of the building's replacement value. The class A office tower is now 98% occupied, with marquee tenants including Wachovia Bank, UBS Financial Services and law firm Beltz & Ruth.
Jackson, MS-based Parkway Properties bought the 23-year-old building ten years ago for $17.4 million and expects to realize a $9-million gain from sale, according to a Securities and Exchange Commission filing. While Wachovia Plaza was its only asset in the Tampa Bay market, the REIT has indicated that it seeks to buy other commercial properties around the state.
CNL's own investments this year include a 46,000-sf office/tech property at Central Florida Research Park, near Orlando, and the 180,000-sf Two Harbour Place office building on Tampa's Harbour Island. It now owns more than 1.2 million sf of assets totaling more than $300 million in value and has offices in Orlando, Tampa, Jacksonville and Atlanta.
"Right now we are bullish on Florida and the Southeast for the long term," Ellis says. "We believe what's happening lately is creating buying opportunities, but we're being very selective about what we go after."
Ellis credits John McRae, a principal in CNL's Orlando office, with putting together the deal to buy Wachovia Plaza. Katie Trott, the firm's senior associate in Tampa, is now in charge of leasing at the building, he said.
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