Parkway Properties, a real estate investment trust that owns and operates office properties in in the Sunbelt and Southeastern regions of the U.S., has taken ownership of an Atlanta office tower that its previously disclosed joint venture foreclosed upon.
The Orlando-based REIT previously announced that it acquired a 40% common equity interest in a mortgage note secured by 7000 Central Park, which had an outstanding balance of $65 million at closing. The total purchase price for the note was $56.6 million plus an additional $318,000 in transaction costs.
Parkway’s share was approximately $45 million, comprised of an investment of about $37 million for a preferred equity interest in the joint venture that acquired the note and an investment of nearly $8 million for a 40% common equity interest.
On Nov. 5, the joint venture foreclosed on the property and assumed ownership of the asset. The joint venture intends to place secured financing on the asset, the proceeds of which will be used to repay Parkway’s preferred equity investment.
The 18-story, 415,000 square-foot property is a Class A office tower built in 1988 with an attached structured parking garage. It offers several amenities including a 7,100 square-foot fitness club with a sauna and steam room, conference and training facilities, an on-site oil change service, and is located near one of the largest retail shopping districts in the region.
The property is currently 77% occupied and is expected to generate initial full-year cash net operating income yield of approximately 5%.
The firm also completed the sale of Carmel Crossing, a 326,000 square-foot office complex in Charlotte, for a gross purchase price of $37.5 million. Parkway Properties Office Fund II, L.P., had a 30% ownership interest in this property and purchased this asset for $25 million in November 2010.
During the fourth quarter, Parkway expects to record a gain on the sale of approximately $14.5 million ($4.4 million is Parkway’s share), and expenses related to the prepayment of the mortgage of about $2.1 million, with $620,000 belonging to Parkway.
Parkway expects to receive more than $7 million in its share of net proceeds for Carmel Crossing.
Through the end of September, Parkway Properties owns or has an interest in 43 office properties located in eight states with an aggregate of approximately 12.6 million square feet.
