Savills To Refinance 340,000-SF Office Portfolio

RICHLAND, WA-Global real estate advisor Savills LLC has been retained by Centurion Properties III as the exclusive financial advisor on the refinancing of a leasehold interest in a five-building, 340,000-square-foot portfolio here. The portfolio comprises four class-A office buildings totaling 311,000 square feet and a 46-unit, 29,000-square-foot short- to long-term-stay facility on the campus of the US Department of Energy’s Pacific Northwest National Laboratory.

Savills will help Centurion refinance a $58 million bridge loan. The asset, which is fully leased on a triple-net basis by the S&P A+ rated government contractor Battelle, generates $6.7 million of net operating income per annum, according to a prepared statement. 

The portfolio was constructed on Battelle’s land over a 12-year period beginning in 1991.  Battelle has an option to purchase the five buildings for one dollar each at expiration of the ground leases in 2051-2060, according to a prepared statement. The purchase option requires full and continuous occupancy by Battelle through the expiration dates.

“In today’s market, we anticipate considerable lender interest in an asset featuring an investment-grade tenant secured by an absolute triple-net leased class-A portfolio,” says Dan Gorczycki, managing director for Savills. “Leveraging Savills' keen understanding of capital markets, we expect to assemble a transaction that delivers highly favorable terms for our client.”

The tenant has invested approximately $17.7 million—or $57 per square foot—in base-building capital expenditures since 1997, including new roofs, state-of-the-art HVAC equipment, and security upgrades, among other improvements. The portfolio benefits from its location on a 350-acre, 2.3-million-square-foot campus, where Battelle’s R&D budget approximates $900 million per year.