REDMOND, WA-At the request of investor partners looking for liquidity, Hines is shopping the best looking girl in its Hines U.S. Office Development Fund. The beauty is Cedar Court, a 428,000-sf, three-year-old development 100% leased to Microsoft and strategically located across the street from software giant’s corporate-owned headquarters campus.

Hines VP Rob Hollister tells that while the development didn’t start out as a build-to-suit for Microsoft, it ended up that way, and the structural, mechanical, electrical and telecommunications build out is second to none in the region. With tenant improvements that ran $100 per sf, Hollister says Hines estimates the replacement cost of the development at between $300 per sf and $325 per sf, or between $128 million and $139 million.

Real estate sources tell the property should trade well below replacement cost. The industry trade publication Real Estate Alert, without showing its math, recently estimated the 428,000-square-foot property to be worth about $250 per sf, or $107 million, which translates to about 84% of the low end of Hines’ estimated replacement cost.

Potential buyers are most likely institutional investors, or Microsoft itself, says Hollister, who acknowledges that some of the potential investors have concerns about Microsoft eventually moving out of Cedar Court — and much of the rest of its estimated 4 million sf of leased space on the Eastside — and onto 150 acres it has optioned in a 2,200-acre master-planned community on the foothills of Issaquah.

“Certainly some have that concern, but others understand how strategic Cedar Court is to Microsoft and how expensive it would be to replicate,” Hollister tells They understand Microsoft is going to be there for a long time.”

Hollister says the offering memorandum will be out soon and a brokerage team led by Bill Palmer, CB Richard Ellis’ franchise player from Sacramento, will represent Hines in the disposition.

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