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REA
September 27, 2017  

2 Big Sales of Austin Office Buildings Struck

The unwinding of a joint venture between DRA Advisors and Brandywine Realty has led to sales agreements involving two Austin office portfolios with a combined value of more than $800 million.

DRA and Brandywine have agreed to sell one portfolio, containing five properties totaling 1.2 million sf, to Starwood Capital for roughly $360 million, or $309/sf.

Separately, Philadelphia-based Brandywine has agreed to buy out DRA’s 50% interest in the other portfolio, with three properties totaling 1.6 million sf. The purchase price couldn’t be learned, but market pros estimate that the package is worth about $480 million, or $300/sf, based on a 6.7% capitalization rate and $32.3 million of net operating income. That would put Brandywine’s purchase price in the vicinity of $240 million.

DRA, a New York fund operator, was prompted to sell its 50% stakes in the two portfolios by debt and fund-maturity deadlines. Each of the unbrokered transactions would be among Austin’s top five office sales ever in terms of total dollars.

Starwood, a fund operator in Greenwich, Conn., would reap an initial annual yield of about 6.9%. It is acquiring:

Encino Trace 1&2 (320,000 sf), at 5708 Southwest Parkway. Occupancy rate: 94.8%. Annual net operating income: $11.5 million.

Cielo Center (271,000 sf), at 1250 South Capital of Texas Highway. Occupancy: 95.7%. NOI: $3.3 million.

Crossings at Lakeline 1&2 (233,000 sf), at 11001 Lakeline Boulevard. Occupancy: 97.8%. NOI: $4.3 million.

Park on Barton Creek 1&2 (205,000 sf), at 3711 South Mopac Expressway. Occupancy: 100%. NOI: $3.2 million.

7000 West at Lantana (136,000 sf), at 7000 West William Cannon Drive. Occupancy: 100%. NOI: $2.8 million.

Brandywine is buying out DRA’s stake in:

Barton Skyway 1-4 (787,000 sf), at 1221, 1301, 1501 and 1601 South Mopac Expressway. Occupancy: 98.4%. NOI: $17.7 million.

River Place (591,000 sf), at 6500 River Place Boulevard. Occupancy: 94.5%. NOI: $11.2 million.

Four Points Centre (192,000 sf), at 11305 Four Points Drive. Occupancy: 100%. NOI: $3.4 million.