Wells Pays $118.5M for 64 & 66 Perimeter Center Buildings
Wells Core Office Income REIT, Inc. has purchased a ground leasehold interest in the 64 & 66 Perimeter Center Buildings, two office buildings containing 583,700 square feet, for $118.5 million.
The 64 Perimeter Center Building is a 15-story office tower built in 1985. The 66 Perimeter Center Building is an eight-story mid-rise office building built in 1971. The buildings are located on 17.4 acres of land in Atlanta, Georgia,
The sellers were RB 64 PCE, LLC and RB 66 PCE, LLC, affiliates of Rubenstein Partners.
The 64 & 66 Perimeter Center Buildings, which were recently renovated, are currently 96% leased to eight tenants and are anchored by State Farm Mutual Automobile Insurance Company.
Once State Farm's phased occupancy, which includes expansion into space currently occupied by existing tenants, is complete in August 2013, State Farm will lease approximately 86% of the 64 & 66 Perimeter Center Buildings. The initial phase of the State Farm lease commenced on December 1, 2012.
For approximately 13 months following the commencement of the initial phase and each expansion phase of State Farm's lease, which are expected to occur in January 2013, March 2013 and July 2013, State Farm is entitled to receive a full rental abatement.
The current aggregate annual base rent of the 64 & 66 Perimeter Center Buildings is approximately $2.3 million. The current weighted-average rental rate of the 64 & 66 Perimeter Center Buildings over the terms of its leases in place for all eight tenants is approximately $14.88 per square foot.
State Farm's lease expires in December 2023, but it has the right to extend the term of its lease for three additional five-year renewal periods at 95% of the then-current market rate. State Farm also has an ongoing right of first refusal and first offer to lease additional space available in 66 Perimeter Center at the then-current terms and conditions for the balance of the space leased.
State Farm plans to utilize the 64 & 66 Perimeter Center Buildings for general office use including, but not limited to, sales and services related to its financial and insurance products.
The $118.5 million acquisition price is exclusive of closing costs and purchase price credits of $12.7 million for rental and operating expense reimbursement abatements and $10.5 million for outstanding tenant improvement obligations.
Fee simple title to the land upon which the 64 & 66 Perimeter Center Buildings are located is held by the Dunwoody Development Authority, which issued Development Authority Taxable Revenue Bonds totaling $115.0 million in connection with significant building renovations. The Bonds will mature and the property tax abatement benefits will expire in April 2027.