Investcorp Sees Opportunities in Debt, Equity

BELLEVUE, WA-Investcorp’s US-based real estate arm has sold its stake in the Bellevue, WA office towers known as Bravern Office Commons, the latest of three successful sales in the last three months that have generated over $610 million in gross proceeds. Investcorp, and its joint venture partner Schnitzer West LLC, completed the sale to a client advised by Principal Global Investors for $410 million.The primary asset in the sale is the 750,000-square-foot office complex in two high-rise towers, recently leased in full to Microsoft. The sale also includes an adjoining parking lot.

The sale of Bravern Office Commons follows Investcorp’s sale last month of its stake in the Maritime Plaza office complex in Washington, D.C. and its sale in June of the mortgage note backed by the Washington, D.C. headquarters of the US Coast Guard.

Herb Myers, a managing director in Investcorp’s real estate group, points out that “These were all profitable exits, even though, in the case of Maritime Plaza and the Bravern, these acquisition investments were made in 2005 and 2007 respectively, when the market was at its peak.” He adds that “This is a result both of our selection of high quality properties and active management during ownership.”

With increasing levels of liquidity in today’s market, Myers says that “we are now also seeing buying opportunities in both the equity and debt spaces. In fact, we are actively negotiating to acquire over $120 million of new deals in the next 30-45 days.” 

Investcorp originally invested in the Bravern in 2007 as part of a joint venture with Schnitzer West to develop a 1.6-million-square-foot premium mixed-use development complex. In addition to the office space, the complex includes two luxury residential towers and a retail shopping center anchored by Neiman Marcus. The total value of the transaction at the time exceeded $800 million. Investcorp retains its stake in the two residential rental towers and the 305,000-square-foot luxury retail space that includes marquee brands Jimmy Choo, Hermes and Louis Vuitton.

Maritime Plaza I and II make up a two-building class A office complex encompassing 362,000 square feet adjacent to the Washington Naval Yard. Investcorp acquired the complex in 2005 with Brickman Assoc. Since then, Investcorp and Brickman have added 16,000 additional square feet of space, pared operating costs and obtained full lease capacity. Investcorp completed the sale of its Maritime stake in September for $119 million to Corporate Office Properties Trust Inc.

In June, Investcorp’s Real Estate Credit Fund completed its sale of the mortgage note to the Coast Guard building to Talos Capital Limited for $89 million. The Fund acquired the note in 2009 for $76 million, a steep discount to its $100 million par value. The deal came ahead of the note’s 2014 due date as the Fund took the opportunity to exit at a profit before investing in improvements to attract a tenant when the Coast Guard’s lease expires.