Trophy Office Campus in Raleigh Commands $135M

By Keith Loria, Contributing Editor

Interior common area at Lenovo Enterprise Campus

Sentinel Real Estate has acquired the three-building Lenovo Enterprise Campus in Raleigh, N.C.’s Research Triangle Park, from 90 North Real Estate Partners, for $135.3 million.

“The appeal of the Lenovo Enterprise Campus, both our investment in and sale of it, was the presence of a long-term lease with a quality tenant that is investing and growing,” Dan Cooper, 90 North’s head of North American operations, told Commercial Property Executive. “Additionally, it represents a highly-sought after campus setting in a market that is one of the most successful tech sectors in the country.”

The sale marks the London-based 90 North Real Estate Partners’ first disposition in the U.S. It was four years ago when the company made its entry into the U.S. market with $750 million to invest. Since June 2012, the firm has closed approximately $1.3 billion in real estate transactions, working with its equity partners.

The 90 North-led partnership, which included Dubai-based Arzan Wealth, acquired the Lenovo Enterprise Campus in February 2015 for $127 million.

Impressive features

The property consists of three buildings: 7001 Development Drive, a four-story, 193,352-square-foot building completed in 1995; 8001 Development Drive, a four-story, 252,232-square-foot building completed in 1998; and 7501 Development Drive, a two-story, 39,952-square-foot building finished in 2017.

On-site amenities at the campus include a cafeteria and food-service operations, a fitness center, outdoor patios, a new conference facility and employee break rooms. An attractive pedestrian bridge links the buildings and offers convenient access to the amenities located within each building. There are also two parking areas large enough for nearly 1,920 automobiles.

The entire campus is spread across 67 acres and boasts outdoor amenities such as an employee recreation area that features a sand volleyball court and basketball court, while offering easy access to a nearby five-acre lake and a 16-acre nature preserve with extensive walking and jogging trails.

The site has sufficient land to accommodate an additional 100,000-square-foot building, which could be used in the future for further expansion by Lenovo, or to accommodate a complementary space user.

The tenant recently gained approval for a $7.5 million solar array project involving an expansive covered parking and roof-mounted solar array. 

“There are many variables to consider with a sale, not least of which is our investment partner’s holding strategy,” Cooper said. “Clearly, we also look at market trends in pricing, interest rates, financing, tenant business etc. All factors considered and driven by our business plan to review the asset and either sell with at least 10 years of lease term or hold longer term, we determined now was the appropriate time to sell.”

According to Cooper, the company’s key investment strategy is to identify properties with long-term, trophy credit tenants, in a growth sector and to look for key property fundamentals that will be present for the lifecycle of a property, allowing multiple exit points while maintaining an excellent distribution to its investors. 

“We took it to market and liked the buyer, Sentinel, and their approach, so we sold,” he said. “We would have been happy to own another 10 years too; there is always a fascinating, internal debate to hold or sell quality assets like the Lenovo Enterprise Campus.”

Raleigh is consistently ranked as one of the top U.S. markets by Forbes and PWC for quality of life, education, workforce and weather. Plus, the Research Triangle Park (RTP) is a life sciences hub and key location for top companies. 

Continuing to invest

The company used the money from the sale to pay off the loan and distribute the proceeds to investors.

“However, we are actively seeking new deals across the U.S. that are similar in scope to the Lenovo Enterprise Campus and some of the other high-profile acquisitions we’ve made over the last 18 months or so,” Cooper said.

Earlier this month, Sentinel acquired 91 Glendale, a 106,000-square-foot office property in Glendale, Ariz. 

Image courtesy of 90 North Real Estate Partners