Starwood buys US office portfolio for $260.5m

The Connecticut-based real estate investment firm purchased the nine office properties from Wells Real Estate Investment Trust II.

Starwood Capital Group has purchased a portfolio of nine office properties, located primarily in the Sunbelt region of the US, from Wells Real Estate Investment Trust II for a total of $260.5 million. The firm did not indicate in its announcement of transaction whether or not the acquisition was made on behalf of its ninth opportunity fund.

The portfolio encompasses 1.9 million square feet of office space and includes One West Fourth Street in Winston-Salem, North Carolina; Lakepointe Corporate Center 5 and Lakepoint Corporate Center 3 in Charlotte; Tampa Commons in Tampa, Florida; Baldwin Point and Siemens Quadrangle II in Orlando; 180 East 100 South in Salt Lake City; and 2000 Park Lane in Pittsburgh, according to data provider Real Capital Analytics. The assets have an average year of completion of 1999 and currently are 95 percent leased, with the exception of the Salt Lake City property.

Mark Keatley, senior vice president at Starwood, noted that the buildings in the portfolio had strong tenant rosters that would generate significant cash flow. “Most of these buildings are located in markets with outsized job and population growth projections,” he said in a statement. Starwood and Wells REIT II both declined to comment.

“This transaction is an excellent opportunity for Starwood and its investors that perfectly fits our investment strategy because it generates strong cash on cash returns, it was purchased significantly below replacement cost per square foot and is located in markets where there is limited new supply,” added Chris Graham, managing director at the firm.

Indeed, many of the assets were purchased at a discount. For example, Starwood paid $61.3 million to acquire One West Fourth Street from Wells REIT, which originally purchased the property for $77.7 million in July 2004, according to RCA. Meanwhile, the firm snapped up Tampa Commons for approximately $35.5 million, compared with the $49.1 million that Wells REIT paid for the property in December 2005.