Wells Fargo and Invesco Real Estate (IRE) have backed the acquisition of The Biltmore Financial Center in Phoenix, Arizona — a deal being hailed as the city’s largest since 2007 — with $124m in financing.
Wells Fargo provided a $90m senior loan and IRE, which sold the three-building office campus on behalf of the State of Florida Retirement Fund, originated a $34m mezzanine loan.
The acquisition price marks the highest sum paid for a multi-tenant office property in Phoenix since 2007 and one of the city’s largest ever, according to published reports. The borrowers and new owners, ViaWest Properties and AllianceBernstein US Real Estate Partners II, paid $163.1m for the assets, putting the loan-to-value at 76%.
The office properties include the 11-story, 300,000 sq ft Northern Trust Bank Tower; the four-story, 209,000 sq ft Biltmore Financial Center I; and the six-story, 126,500 sq ft Biltmore Financial Center III. The office park is 84 percent leased to tenants including Fennemore Craig, Colliers International, and Northern Trust.
Investors and lenders are banking on midsize office markets to continue rebounding from high office vacancy rates that have only creeped lower since the recession. Phoenix has a 25% vacancy rate, while the national average falls below 18%; but while rents at the complex are only in the high $20s per sq ft, new ownership reportedly plan a renovation and repositioning that they hope will boost them to the mid-$30s per sq ft.
Wells Fargo clinched the number one spot in the Mortgage Bankers Association’s Commercial Real Estate/Multi-family Finance Firms – Annual Origination Volumes report, with a total of $50.3bn of financings in 2014. IRE manages global investments in direct real estate, real estate securities, infrastructure securities and master limited partnerships (MLPs).
Wells Fargo and IRE did not respond to request for comment regarding loan terms.
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