ATLANTA — Jackson, Miss.-based Parkway Properties has purchased the office and retail portions of an Atlanta trophy tower for $167.3 million. The property is a 50-story mixed-use building located at 3344 Peachtree Road in the Buckhead submarket of Atlanta.
Parkway purchased the 484,000-square-foot office and retail portions of the building along with an adjacent, 11-story parking garage. Tenants include Jones Lang LaSalle; Weinberg, Wheeler, Hudgins, Gunn & Dial; SPANX; Littler Mendelson; Fifth Third Bank; Hodges Ward Elliott; The Buckhead Club; Barclays; and Bistro Niko. The 82-unit condominium component of the tower, known as SOVEREIGN, was not included as part of the deal.
Parkway made the acquisition on behalf of its Parkway Properties Office Fund II, a $750 million discretionary fund formed in 2008 for the purpose of acquiring high-quality, multi-tenant office properties. The fund, of which Parkway Properties owns a 30 percent stake, will contribute $130 million toward the purchase, with Parkway Properties itself contributing the remaining $7.3 million. The buyer expects to spend an additional $2.6 million in closing costs, capital improvements and leasing costs during the first two years of ownership.
“3344 Peachtree is one of the premier office properties in Atlanta,” says Parkway President and CEO Steven Rogers in a statement. “We are glad to complete this purchase and officially add this asset to our portfolio. We believe in the long-term investment value and performance of the Buckhead submarket of Atlanta, and the quality and location of 3344 Peachtree are unmatched within that area. This is evidenced by the leased percentage increasing from 93 percent to 97 percent since our announcement in December.”
In addition to the purchase price, the fund will assume an $89.6 million first mortgage for the property. The loan has a 4.75 percent fixed interest rate and a maturity date of October 2017. Parkway expects to yield a going-in capitalization rate of 6.8 percent for the first year and an initial cap rate of 8.8 percent.
Parkway Properties Office Fund II currently controls four properties totaling 1 million square feet. The portfolio is valued at $193 million.
— Coleman Wood