NEW YORK CITY—Gramercy Property Trust said Monday it had sold a 75% interest in a six-property office portfolio to TPG Real Estate, as part of a $400-million partnership the two firms have launched. To be known as Strategic Office Partners, the new platform will seek to acquire up to $1 billion in single-tenant office assets in high-growth metropolitan areas across the US over the next three years.
The Gramercy portfolio seeding the new venture is valued at $187.5 million, or $191 per square foot, with a weighted average remaining lease term of 3.6 years at closing weighted by square footage. It totals about one million square feet in three California metro areas—Los Angeles, San Francisco and San Diego—as well as Nashville and Minneapolis.
“We see a compelling investment opportunity in the office net lease sector and believe that this portfolio of high-quality assets in strong growth markets is poised to benefit from positive fundamental trends,” says Avi Banyasz, partner at Dallas-based TPG and co-head of TPG Real Estate. “We look forward to working with Gramercy, a best-in-class owner and operator, whose extensive experience in the space will prove valuable as we work together to manage and expand the platform.”
At Gramercy, president Ben Harris says his company “will look to leverage its extensive asset management experience from managing its own portfolio and the portfolios of third party clients to enhance the value of the platform over time.” The company will retain a 25% interest in the new venture, which will be initially financed with a $200-million non-recourse secured credit facility from Morgan Stanley as well as equity from the Gramercy and TPG Real Estate.
Following this sale, Gramercy has disposed of approximately $1.4 billion of non-core assets in 2016. The interest in the portfolio was sold for an exit cap rate of 9.5%, compared to a year-to- date weighted average disposition cap rate for non-core asset sales is 6.9%.
The Gramercy portfolio seeding the new venture is valued at $187.5 million, or $191 per square foot, with a weighted average remaining lease term of 3.6 years at closing weighted by square footage. It totals about one million square feet in three California metro areas—Los Angeles, San Francisco and San Diego—as well as Nashville and Minneapolis.
“We see a compelling investment opportunity in the office net lease sector and believe that this portfolio of high-quality assets in strong growth markets is poised to benefit from positive fundamental trends,” says Avi Banyasz, partner at Dallas-based TPG and co-head of TPG Real Estate. “We look forward to working with Gramercy, a best-in-class owner and operator, whose extensive experience in the space will prove valuable as we work together to manage and expand the platform.”
At Gramercy, president Ben Harris says his company “will look to leverage its extensive asset management experience from managing its own portfolio and the portfolios of third party clients to enhance the value of the platform over time.” The company will retain a 25% interest in the new venture, which will be initially financed with a $200-million non-recourse secured credit facility from
Following this sale, Gramercy has disposed of approximately $1.4 billion of non-core assets in 2016. The interest in the portfolio was sold for an exit cap rate of 9.5%, compared to a year-to- date weighted average disposition cap rate for non-core asset sales is 6.9%.
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