Investcorp sells office complex to Principal Global

Investcorp has sold two office towers in a 1.6 million-square-foot development project in Washington state for $410 million to Principal Global Investors – as it also eyes more than $100 million of new deals.

The New York-based firm said in a statement the Bellevue office properties comprised 750,000-square-feet of space and were fully leased to Microsoft. The sale, to a client being advised by Principal Global, does not include the complex’s 305,000-square-foot retail space or two residential towers, which Investcorp and its joint venture partner, development firm Schnitzer West, still own.

Investcorp acquired an undisclosed stake in 1.6 million-square-foot development project, The Bravern, in downtown Bellevue, near Seattle, in 2007 – one year after Schnitzer started construction.
The total value of the Bravern transaction exceeded $800 million, with Investcorp investing a majority of the project equity and Schnitzer West providing a “substantial portion of the balance of the overall project equity” as well as acting project developer, according to media reports at the time.

Investcorp is in the process of renting the two residential towers, which were originally earmarked as condos and one of which is 65 percent leased.

The sale is part of a slew of dispositions Investcorp has made over the past six months, including selling the $100 million first mortgage on the US coast guard headquarters in Washington DC for a $13 million profit just 15 months after acquiring it. Investcorp, the property arm of the Bahrain and London-listed alternative investment firm, acquired the senior note on 2100 2nd Street for $76 million in 2009, selling it in June to Talos Capital for $89 million.

However Herb Myers, Investcorp managing director, said the firm was not just in selling mode – it was also actively negotiating to acquire more than $120 million of new deals in the next 30 to 45 days.

Myers told PERE the firm was generally targeting core-plus-style deals with “relatively high cap rates and offering solid cash flow. While we were somewhat active over the past year, the number of opportunities has recently increased.”

He stressed though that the US remained a “challenging investment market”, with Investcorp focused on equity and debt investments in the top 20 to 25 metropolitan markets.