CBRE Fund Buys $144M Trophy Office in Atlanta Suburb

 By Scott Baltic, Contributing Editor

CBRE Strategic Partners U.S. Value 6, a Los Angeles–based fund sponsored by CBRE Global Investors, has purchased Three Ravinia, a 31-story, 813,750-square-foot trophy office building in north suburban Atlanta, the fund announced Friday. The off-market transaction was for $144.3 million, according to a release by the seller, Colonial Properties Trust, of Birmingham, Ala.

The building, developed by Gerald Hines Interests and completed in 1992, is in Dunwoody, in metro Atlanta’s Central Perimeter submarket, reportedly the largest concentration of office space in the Southeast.

“The Perimeter submarket experienced significant net office absorption in 2012 and is projected to have accelerated job growth in the near-term,” Vance Maddocks, president of CBRE Strategic Partners U.S., said in a release.

Three Ravinia is currently 91 percent occupied, and InterContinental Hotels Group occupies almost 50 percent of the building, a CBRE spokesperson told Commercial Property Executive.

As part of a strategy to address near-term lease expiration risk, the buyer is planning a capital campaign to upgrade building systems and the amenities package, as well as make cosmetic improvements to common areas and begin seeking LEED Silver certification.

The property was unencumbered, according to the seller, and sales proceeds were used to repay a portion of the outstanding balance on Colonial Properties Trust’s unsecured credit facility.

“The disposition of Three Ravinia is a significant step in the execution of our multi-family-focused strategy and strengthens the company’s balance sheet,” Colonial chairman and CEO Thomas Lowder said in the REIT’s release. “Following the disposition, 95 percent of the company’s net operating income will be generated from our multi-family portfolio.”

As of the fourth quarter, the average Central Perimeter Class A office vacancy was 15.3 percent, versus an overall 18.5 percent rate for metro Atlanta, according to CBRE. In addition, the submarket absorbed more than 950,000 square feet of office space in 2012.

CBRE Strategic Partners U.S. Value 6 has been very active of late. Among its recent acquisitions was its first hotel, the 506-room San Jose Marriott, for roughly $83 million.