A state farm insurance-based commercial campus outside Dallas has been sold to the former owner of the Phoenix Suns in what was touted as the most expensive suburban office deal in the nation this year.
The 2.2 million square foot campus in Richardson, Texas, called CityLine, consists of four office buildings leased by State Farm Insurance. 1150 State Street, 1201 State Street, 1251 State Street and 1415 State Streetwhich includes 120,000 square feet of ground floor retail space and an approximately 42,000 square foot medical office building. 3661 N. Plano Road.
The CityLine portfolio was sold to 3Edgewood Real Estate. Paradise Valley has partnered with Arizona-based former NBA Suns owner Robert Sarver for $580 million, according to real estate experts familiar with the deal.
The sale comes as office real estate across the U.S. is experiencing weak demand as the pandemic prompts employers to implement remote work policies and companies cut back on operations amid an economic downturn caused by high interest rates. It was conducted. This transaction allows you to capture changes in the value of a property type.
CityLine's deed was recorded in Collin County on Tuesday, closing just days before the deadline for loans totaling more than $450 million secured by the property. The CityLine campus' transaction price is down from when it last sold for about $822 million about seven years ago, according to CoStar data.
Other high-profile office sales this year include the $998 million acquisition of a 49.9% stake in 245 Park Avenue in New York City, the $490 million purchase of One Liberty Plaza in New York City, and Fair Includes the $305 million sale of Liberty Crossing 1 in Fax. , Virginia, according to CoStar data.
CityLine's campus, located in Richardson, about 29 miles north of downtown Dallas, is the largest known suburban office deal this year, according to CoStar data. However, some states such as Texas are closed to the public, and real estate prices are not made public.
The Dallas-Fort Worth region is the nation's fourth-largest metropolitan area with more than 7.8 million residents, but like the rest of the country, capital is struggling due to economic uncertainty, rising debt rates, and office prospects. Market activity is slowing down. Space remains a concern among real estate investors.
The CityLine portfolio was sold ahead of a loan related to the property that was due Nov. 6, according to a mid-October report from credit rating agency Kroll Bond Rating Agency. loanhad a principal balance of $452.3 million as of last month, a fixed interest rate of 2.785%, and no extension options available. The credit rating agency has placed Cityline's portfolio on its watch list ahead of upcoming loan maturities.
KBRA said in the report that approximately 95% of City Line's total base rent comes from its lease with State Farm Insurance. His four triple net leases with State Farm Insurance have expiration dates ranging from eight to 18 years from the loan term, with renewal options for up to 20 years. There are no early termination options on any leases.
State Farm Insurance previously told CoStar News: I am considering subletting part of the property. On campus.
Chris Murphy, vice chairman of Newmark's Dallas office, said in a statement that the lease agreement with a high-quality tenant and the potential for “significant upside opportunity” made this a popular deal with investors. Stated. Newmark represented the seller in the transaction.
The debt's borrowers were South Korea-based Mirae Asset Global Investments, which accounted for 94% of the loan, and Transwestern Investment Group, which accounted for 6% of the loan, according to KBRA. Mirae Asset Global Investments, in partnership with Transwestern Investment Group, acquired his CityLine campus from Dallas-based developer KDC in 2016.
Proceeds from the $580 million sale to 3 Edgewood Real Estate will be used to repay the loan in full, KBRA said. Representatives for Mille Asset Global Investments and Transwestern Investment Group did not immediately respond to requests for comment from Coster News.
Public records show that CityLine's new owner, Three Edgewood Real Estate, partnered with Sarver last month to operate in Texas as the management company for JFSF Edgewood, a newly formed entity. Therefore, an application was filed with the Texas Secretary of State. Thurber did not immediately respond to an interview request from KoStar News on Wednesday.
Mr. Thurber co-founded Southwest Value Partners, a San Diego-based real estate development company, in 1990. Southwest Value Partners did not immediately respond to a request for comment from KoStar News.
Sarver sold the Phoenix Suns and the WNBA's Phoenix Mercury basketball team at the end of 2022 for about $4 billion.
Mr. Murphy, Robert Hill and Gary Carr of Newmark represented the seller in this transaction in conjunction with Newmark's Kevin Shannon, Ken White and Alex Foshay. Newmark's David Milestone, Josh Francis and Henry Cassiday provided debt capital markets advice on this transaction.
