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Lone Star flips half of State Farm portfolio

Six months after purchasing a 23-property office portfolio, the Dallas-based private equity giant has sold 14 of the properties to JDM Partners for approximately $550 million.

Dallas-based private equity firm Lone Star Funds has sold 14 properties in its 23-property State Farm office portfolio just six months after purchasing them. Phoenix, Arizona-based private equity real estate firm JDM Partners acquired the offices for approximately $550 million, according to data provider Real Capital Analytics (RCA). JLL and Eastdil Secured acted as brokers for the deal.

In November, Lone Star bought the 23 buildings from US insurer State Farm through a $720 million sale-leaseback transaction. The portfolio comprised 6.2 million square feet across 16 states.

JDM purchased 14 of those properties totaling 3.3 million square feet. The offices, which State Farm uses as operations centers, are located in Tennessee, Missouri, Virginia, Nebraska, Colorado, New York, Alabama, Florida, Ohio and Oklahoma.

UBS originated a $385 million fixed-rate loan for the deal, according a report by Commercial Mortgage Alert. State Farm has signed triple-net leases on 12 of the properties until 2028 and on one until 2023. The other lease has five years remaining on its term.

The acquisition represents a repeat strategy for JDM, which purchased another State Farm office building last May through a sale-leaseback deal. According to RCA, the firm bought Warner Crossing 3 for $73 million.

JDM currently is raising its second opportunistic offering, JDM Partners Opportunity Fund II. The fund, which is targeting $300 million in equity, held a first close on $35 million in August.