MEMPHIS-Highwoods Properties Inc. has acquired Crescent Center, a 336,000-square-foot-class A office building located in the upscale Poplar Avenue corridor in Memphis. The Raleigh, NC-based REIT invested $52.6 million in the 24-year-old property.
To purchase the property, Highwoods assumed the debt, a CMBS loan from the former owner, an affiliate of Behringer Harvard. “While the loan balance is higher than $40.3 million, the interest rate is below market and you have to mark the debt to market,” says Tabitha Zane, vice president, investor relations at Highwoods. “When you do that, the balance that goes on the books is $40.3 million,” she says. An additional $12.3 million covered a cash payment and improvements to the property.
Crescent Center is a nine-story office building which sits on 10.18 acres at the southwest corner of Poplar Avenue and Ridgeway Road near I-240.
Crescent Center is 89.5% occupied and is expected to generate first year cash net operating income of approximately $4.8 million, excluding $350,000 of acquisition-related costs.
“We are pleased to acquire one of the best office properties in Memphis,” says Ed Fritsch, Highwoods president and CEO. Highwoods owns 10 office buildings in the Poplar corridor submarket, including the latest acquisition, for a total of 1.3 million square feet. It owns 20 office buildings in the metropolitan Memphis market with a total of 2.1 million square feet. The portfolio is 88.8% occupied, according to the company.
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