UrbanAmerica acquires $485m GSA portfolio

The deal is the private equity real estate firm’s largest to date and includes 13 offices and one distribution centre across 10 US states. The firm says some institutional investors are looking for “less volatile” real estate opportunities.

UrbanAmerica has bought a 14 building, GSA portfolio for $485 million, the largest deal ever closed by the New York-based real estate investment firm.

The portfolio of 13 office buildings and one distribution centre is 93 percent leased to US government agencies, through the centralised agency the General Services Administration (GSA). Richmond McCoy, president  and chief executive officer of UrbanAmerica, told PERE the portfolio included debt financing that matured in 2015.

The deal was made through the firm’s UrbanAmerica Fund II, which closed on $400 million in 2006 and is almost fully invested. Investors in the seven-year fund, which equally targets value-added strategies and development as well as core-plus real estate investments, include US public and corporate pensions, banks and insurance companies.

McCoy said the GSA portfolio was a “strong, stable and sustainable” investment amid the current market turmoil. GSA tenants, he said, had an average occupancy term of 38 years.

Arguing that some institutional investors were increasingly looking to more stable investments, McCoy added: “When you look at some of the distressed real estate opportunities, you have to ask how you can model an exit on such acquisitions when you don’t know when the debt is coming back or what the user side of the equation will be.

“This is a very difficult environment and the market is extremely opaque. Some investors are looking for less volatility,” he added.

The GSA portfolio includes properties located in Washington DC, Philadelphia, Boston, Sacramento, San Diego, Houston, Denver, Kansas City, Providence in Rhode Island, Burlington in New Jersey, Norfolk and Suffolk in Virginia and Huntsville in Alabama. CBRE will continue to manage the properties.