Oaktree-led venture buys 40-building portfolio for $240m

The 3.4 million-square-foot office portfolio, which consists of properties in eight states, is 90 percent leased to Wells Fargo Bank.

A joint venture between two Los Angeles-based investment firms has purchased a portfolio of US office properties primarily occupied by Wells Fargo Bank. Oaktree Capital Management and National Financial Realty (NFR) have partnered together to acquire the 40 buildings from KBS Realty Advisors for $240 million. 

Although a statement from the venture reveals that Oaktree bought its stake on behalf of a fund, the firm declined to disclose which vehicle acquired the assets. However, according to its most recent earnings call, Oaktree has fully invested Oaktree Real Estate Opportunities Fund (ROF) V, which means it is likely that the firm purchased its stake in the portfolio on behalf of ROF VI, which currently is in the market targeting $1.5 billion. 

The 3.4 million-square-foot office portfolio is 90 percent leased to Wells Fargo. The assets are located in eight Eastern and Southeastern states, including North Carolina, South Carolina, Virginia, Florida, New Jersey, Pennsylvania, Maryland and Georgia.

According to John Brady, managing director and head of global real estate for Oaktree, this off-market acquisition was “principally backed by 11 years of Wells Fargo credit at a 50 percent discount to replacement cost.”

The largest concentration of properties in the portfolio is located in North Carolina, which represents eight buildings totaling 1.2 million square feet. This includes a 450,000-square-foot regional operation center in Raleigh and a total of 616,000 square feet in Winston-Salem. The second largest concentration is in Pennsylvania, with five buildings that comprise 600,000 square feet, including an almost 500,000-square-foot regional operations center in Philadelphia.

Vincent Pellerito, president and chief executive of NFR, said: “The acquisition of this portfolio fits perfectly into NFR’s investment strategy to acquire properties leased to financial institutions that offer reliable cash flow and significant potential for appreciation.” 

Pellerito added: “We also appreciate this opportunity to expand our relationship with Wells Fargo beyond our current ownership of its operation and data center in Hillsborough, Oregon.” Founded by Pellerito in 2006, NFR either directly owns or has operating interests in 142 properties totaling more than 8.1 million square feet throughout the US.