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July 04, 2018  

Hines Breaks Up Big Office Portfolio for Sale

Hines has launched separate marketing campaigns for seven office properties nationwide, worth more than $900 million in total.

The properties, which encompass about 2.2 million square feet, were originally shopped quietly as a portfolio, along with an eighth property. Hines is now opting to market them one-by-one. Eastdil Secured has the listings: Three in Massachusetts, two in California and one each in Minnesota and Washington, D.C.

The offerings are part of the ongoing liquidation of Hines Global REIT. The Houston investment manager announced in April that it plans to sell the vehicle’s interests in 34 properties in the U.S., Australia, Russia and Europe.

The seven listed properties represent the bulk of the nontraded REIT’s U.S. office holdings.

The largest concentration is in suburban Boston, where three properties totaling 1.2 million sf are on the block with a combined valuation of about $315 million.

The largest of the three is the 510,000-sf Riverside Center, at 275 Grove Street in Newton, Mass. The complex, which is 88% occupied, encompasses three buildings connected by a four-story glass atrium. Hines acquired it for $197.1 million in 2013. The campus is at the intersection of the Massachusetts Turnpike and Route 128, next to the Riverside Station MBTA stop.

The 532,000-sf Campus at Marlborough, at 100 Campus Drive in Marlborough, Mass., is 78% leased. Its three connected buildings sit on 121 acres, and approvals are in place to construct an additional 650,000 sf. There’s a cafeteria, a fitness center and conference facilities that include a 300-seat auditorium. Hines paid $103 million for the property in 2011.

The other Boston-area property should appeal to opportunistic buyers. The 185,000-sf building, at 250 Royall Street in Canton, Mass., is fully occupied, but will become vacant next year when its sole tenant relocates. The three-story building was completed in 2001. Hines bought it in 2011 for $57 million.

In California, Hines is offering the 350,000-sf Campus at Playa Vista, in the Silicon Beach area of Los Angeles. As previously reported, the “creative” office complex is expected to fetch roughly $1,000/sf, or $350 million. The four Class-A buildings in the complex are 98.7% leased.

Also in Southern California, bids are sought on a 132,000-sf building at 2300 Main Street in downtown Irvine. Developed in 2002, the five-story building is fully occupied. It’s valued at roughly $40 million, about what Hines paid for the property in 2013.

The Washington listing is for the 268,000-sf building at 55 M Street SE, valued at roughly $145 million. The nine-story building, completed in 2009, is 96% leased. It’s at the corner of Half Street in the Capital Riverfront submarket, about a block north of the Washington Nationals’ baseball stadium. Hines acquired it for $140.9 million in 2013.

The only Midwest property is the 255,000-sf building at 9320 Excelsior Boulevard in Hopkins, Minn., 12 miles southwest of Minneapolis. It was completed in 2010 and is fully occupied by CarVal Investors. Hines paid $69.5 million for the property in 2011.

Hines Global REIT owns two other U.S. office properties: the 524,000-sf Summit office complex in the Seattle suburb of Bellevue, which the REIT acquired in 2015 for $316.5 million; and the 289,000-sf building at 550 Terry Francois Boulevard in San Francisco, which it acquired in 2012 for $180 million. The San Francisco building was included in the scuttled portfolio offering. Neither of the two properties is currently on the market.

The REIT also owns four retail centers, in Minnesota, Florida, Tennessee and Texas, and a residential property in Texas. The rest of its holdings are outside the U.S.