Los Olas Centre Sells for $170M

FT. LAUDERDALE, FL-The Las Olas Centre, a two-building office complex spanning 469,353 square feet in the Las Olas corridor, has sold for $170 million. San Antonio-based USAA Real Estate Company affiliates US Republic Core Fund and U.S. Premier Office Equities purchased the towers from BF Las Olas, LLC, an entity of Wachovia/Wells Fargo.

BentleyForbes paid $230.9 million for the complex in 2007, but lost the property to foreclosure after defaulting on a $166 million loan to Wells Fargo. USAA Real Estate paid about $362 for the towers, more than $100 a foot less than some analysts expected. Still, the class A property is the highest-priced office building transaction in South Florida this year.

"Downtown Fort Lauderdale, with its central location in the South Florida tri-county area, has remained an address of choice for businesses," says USAA Real Estate Company Chairman and CEO Pat Duncan. "Las Olas Centre embodies the quality in design and location that has attracted a stable tenant base, making the asset a premium addition to our portfolio."

Located at 350 and 450 Las Olas Blvd, the 18- and 14-story towers share street-level retail and parking space on Las Olas Boulevard. Huizenga Holdings, Wells Fargo, Bank of America, Morgan Stanley and the law firm of Akerman Senterfitt & Edison are among the towers’ tenants.

“Many investors have been sitting on a tremendous amount of cash waiting for the right time and the right acquisition opportunities,” Jack McCabe, principal of McCabe Research & Consulting in Deerfield Beach, tells GlobeSt.com. “We are starting to see early signs that potential buyers have determined prices are either at or near the bottom. They see tremendous upside with an acquisition at today’s prices and a minimum hold time of five to seven years.”

Los Olas Centre is about 92 percent leased, bucking the office trend in Broward. Overall leasing activity, including renewals, totaled 353,163 square feet for first quarter 2010, down 22.3% from the 454,314 square feet recorded during first quarter 2009, according to CB Richard Ellis. The overall average asking direct lease rate declined by 8.4% from the $18.08 per square foot recorded during fourth quarter 2009. With the lower basis, USAA can lower rents and still profit.

The sale Los Olas Centre may be the first in a wave of class A commercial properties to sell at below 2007 prices. “This is not the last deal we are going to see where a lender takes back a trophy property and sells it,” David Moret, a vice president at Continental Real Estate Companies in Miami, tells GlobeSt.com. “When that trend is going to break loose and to what degree is anybody’s guess.”