AUSTIN, TEXAS — Brandywine Realty Trust (NYSE: BDN) and DRA Advisors LLC have formed a joint venture to acquire Brandywine’s portfolio of office properties in the Southwest submarket of Austin. The venture will pay $330 million for the assets, which total nearly 1.4 million square feet.
The deal is expected to generate $271.6 million in proceeds for Brandywine, which plans to use the funds to fuel its growth and deleveraging strategy.
Brandywine and DRA previously partnered on a similar transaction in 2007 involving a suburban Philadelphia office portfolio. The two companies will each own a 50 percent interest in the new joint venture.
“Through our existing joint venture, we enjoy an excellent relationship with DRA Advisors and are excited to expand that platform into the Austin market,” says Gerald Sweeney, president and CEO of Brandywine. “The going forward equity commitment by both parties positions us well to continue growing our position as one of Austin’s leading landlords.”
To date, the joint venture has secured $230.6 million of non-recourse debt through three mortgages, which have a weighted average maturity of five years and an expected weighted average interest rate of 3.75 percent.
The properties to be acquired include the four-building Barton Skyway, currently 94.4 percent leased; the two-building The Park on Barton Creek, currently fully leased; the two-building 7000 West at Lantana, also currently fully leased; and the three-building Cielo Center, currently 99.6 percent leased.
Brandywine will retain the construction management, property management and leasing duties for the assets. Down the road, the joint venture will explore additional acquisitions in Austin.
“We look forward to expanding our successful relationship into the vibrant Austin office market,” says David Luski, president of DRA. “We believe that Austin is one of the most desirable investment markets in the country, and, over time, we hope to increase the size of the portfolio and expand our market share.”
New York-based DRA Advisors was founded in 1986 and currently holds $11 billion in assets under management. The company has acquired over 1,000 properties valued at more than $20 billion since its inception.
Brandywine, based in Radnor, Pa., owns 283 office properties totaling 32.9 million square feet. The company’s stock closed at $37.01 per share Monday, up from $31.74 a year ago.
— John McCurdy