Inland Buys Third AT&T Building for $29M

At the Pewaukee building, AT&T Services Inc. will continue to be the sole occupant of the 117,000-sf facility, which is on more than 11 acres. The building houses a call center, a training facility, a sales and marketing center and a real estate department.

Cosenza tells GlobeSt.com that the company signed a 25-year lease, but has the option to leave the building after 10 years. The company is paying $12 per sf for rent, he says.

The global telecom provider is a great tenant to have, and there were other benefits to this purchase, Cosenza says. "The per sf price was reasonable for a facility in the suburbs of Milwaukee," he says. "Along with that is the fact that the rent per sf is slightly under market. These are the things you have to look at, you can't just look at the brick and mortar price. Just because you have a super-duper tenant, doesn't mean you should go overboard paying for something. For instance, if they want me to pay $40 million and the building has $20 per sf net, that's way too far above market, if they leave in 10 years, I don't know I can get the same rent for the building."

Inland also owns the 1.7 million-sf AT&T Center property in Hoffman Estates, IL, purchased in November 2005 for $338 million. Cosenza also brokered that deal.

AT&T has been closing many sale-leaseback deals as of late, including the sale-leaseback of its headquarters property in Bedminster, NJ to MetLife Inc. for $270 million in December 2006. The telecom company also completed the sale and partial leaseback of Sterling Commerce Plaza, a 308,554-sf office building in Irving, TX with Wells Real Estate Funds of Norcross, GA, which purchased it on behalf of the Wells Real Estate Investment Trust II and the sale of a 430,000-sf vacant office building, the SBC Building in San Francisco, for $58.5 million to a joint venture of McLean, VA-based JER Partners and Lane Partners of San Francisco. An AT&T spokesperson describes the sale-leasebacks as part of the company's ongoing real estate strategy. "Through the corporate acquisitions over the years, AT&T owns a lot of real estate," he says. "Like a lot of companies, AT&T is looking to manage capital."