Trophy First Union Financial Center Sold to Aussies, Germans

Lend Lease U.S. Office Trust of Sydney and real estate syndicator KanAm Group of Munich paid Shorenstein Co. of San Francisco $270 million or $234.78 per sf, the highest price ever paid for an office building in Florida, according to GlobeSt.com research.

The Australian and German partners each paid $134.75 million to acquire a 50% ownership interest in the 18-year-old, 95%-leased, 1.15-million-sf landmark structure at 200 S. Biscayne Blvd., one block from Interstate 95 and immediately adjacent to the Bayfront Park Metro rail system.

The transaction has triggered a rush of for-sale properties along Biscayne Boulevard, the city's dominant thoroughfare, and on Brickell Avenue, Miami's financial district.

Area brokers tell GlobeSt.com on condition of anonymity New York-based JP Morgan Chase is negotiating to buy the 35-story, 19-year-old, 782,686-sf Miami Center at 201 S. Biscayne Blvd. from Crescent Miami Center LLC. Miami Center is across the street from First Union Financial.

The speculated price among brokers for Miami Center is at least $200 per sf or about $156 million. Rents at the 96%-leased property are $29 per sf to $34.50 per sf.

Second-quarter quoted average rents Downtown are $32.50 per sf; $32.70 per sf in the central business district; and $32.96 on Brickell Avenue, according to the Fort Lauderdale, FL office of Cushman & Wakefield of Florida Inc.

In selling First Union Financial, Shorenstein realized a gross profit of 23% or $63 million after holding the asset since 1996 when he bought it from New York-based Aetna Life Insurance Co. for $207 million or $180 per sf, according to the company's prepared statement at the time of the acquisition.

Houston developer Gerald Hines finished the two-year construction on the building in 1984 when it was known as Southeast Financial Center, named after the defunct Southeast Bank.

In 1994, however, Hines gave the building back to Aetna after the insurance carrier foreclosed on a $220 million construction loan.

In a prepared statement today, New York-based Lend Lease USOT Management Ltd., the trustee of Lend Lease U.S. Office Trust, says First Union Financial is expected to provide an income yield of 8.1% on its acquisition price.

The average lease term is 4.6 years with less than 13% of the office space expiring in the next two years, Ian Smith, fund manager, Lend Lease U.S. Office Trust, says in the statement.

Besides Charlotte-based First Union National Bank of Florida, other name tenants are Goldman Sachs, Ernst & Young and Prudential Bache Securities, according to the statement.

New York-based Skidmore, Owings & Merrill and Spillis Candela & Partners of Coral Gables were the project architects for the tower.

The first building at First Union Financial is 55 stories and is all office, providing tenants with a panoramic view of Biscayne Bay and Downtown. The second 15-story building houses the garage for 1,120 cars, a banking hall for First Union, retail and health club amenities.A covered pedestrian plaza links the structures.

Lend Lease Real Estate Investments formed Lend Lease U.S. Office Trust in December 1999 to give Australian investors an investment window on U.S. office properties. The Trust is listed on the Australian Stock Exchange.

According to the Web site of U.S. Lend Lease Office Trust, American assets held by the Trust are 10 South Wacker Drive and 30 South Wacker Drive, Chicago (25% ownership); Bank One Centre, Indianapolis, IN, 75%; SunTrust Center, Orlando, 75%; Promenade II, Atlanta, 50%; Pasadena Towers, Pasadena, CA, 75%; One Liberty Square, Boston, 100%; Preston Commons, Dallas, 50%; and Sterling Plaza, Dallas, 50%.

The KanAm Group has been forming closed-end real estate funds in Europe and the United States since 1978. Besides its Munich headquarters, the company has offices in Frankfurt, Eschborn and Atlanta. KanAm requires an initial investment of $50,000 from private investors.

The tallest office building in the Southeast is the 60-story, 1.4 million-sf SunTrust Plaza at 303 Peachtree Street NE, Atlanta. The 871-foot high structure was developed in 1992 by Portman Holdings/Atlanta; designed by John Portman and Associates/Atlanta; and built by J.A. Jones Inc./Charlotte.