SEATTLE-At a cost of $348 million, the New York-based real estate investment fund TIAA-CREF is the new owner of IDX Tower, an 845,533-sf, three-year-old Downtown office building here that is about 96% leased. The high-credit tenant roster at IDX Tower includes its namesake, IDX Systems Corp., as well as architecture firm Zimmer Gunsul Frasca Partnership, law firm Preston Gates & Ellis LP and securities firm McAdams Wright Ragen Inc. TIAA-CREF acquired the 40-story building as part of a $1.47-billion five-property purchase from National Office Partners, a limited partnership of Texas-based Hines and the California Public Employees Retirement System (CalPERS). The package of assets sold to TIAA-CREF included two office buildings in Washington, DC, one in San Francisco and one in nearby Pleasanton, CA. The two DC properties, 1001 Pennsylvania Ave. (758,796 sf) and 1900 K St. (342,884 sf), were acquired for $461 million and $217 million, respectively, according to sources familiar with the transaction. The San Francisco property, 50 Fremont (817,412 sf), commanded $335 million and the Pleasanton asset, Stoneridge Corporate Center (559,829 sf), was purchased for $116 million.The sale of IDX Tower was brokered by Jay Borzi, Steve Silk and Stephen Van Dusen of Los Angeles-based Secured Capital. The brokers could not be reached for comment. A spokesperson declined comment.Some reports put the purchase price of IDX Tower at closer to $369 million, but sources close to the deal tell that figure includes the cost to pre-pay the $145-million in above market debt on the property that TIAA-CREF ultimately assumed and has not yet refinanced. The same situation exists with 50 Fremont, which is to say that if TIAA-CREF opts to refinance the above-market debt on that property, it would have to pay a $20-million prepayment penalty. According to Seattle-area sources, the record $411-per-sf purchase price for IDX reflects the low interest rate environment and the heavy competition for trophy assets more so than the above-market lease rates being paid by tenants in the building. The above-market rents bring paid by tenants who signed on at the top of the market in 2000, two years before the building was delivered, have been offset by market rate deals done over the past three years, say local brokers. As a result, they say the overall average effective lease rate in the building is close to current market rates.National Office Partners JV acquired IDX Tower from the developer, locally based Martin Smith Real Estate Services. The total development cost of the building is believed to have been in excess of $270 per sf. The disposition leaves Hines with one building in the region, 800 Fifth Ave., but company executives have said it is interested in acquiring more properties in the region.Earlier this year, Hines sold the 480,000-sf One Twelfth @ Twelfth office campus in Bellevue, WA, to Des Moines, IA-based Principal Real Estate Investors for about $284 per sf or about $136.4 million. Prior to the IDX Tower sale, the per-sf high-water mark was $393 per sf, the amount Biomed Realty Trust Inc. paid Seattle-based Sabey Corp. for the 135,000-sf Elliott Park building and an adjacent parcel.The buildings that National Office Partners sold to TIAA-CREF were some of the 13 properties totaling 7.8 million sf that the partnership brought to market this summer. Hines on Thursday announced the sale of another of the properties, 55 Railroad Ave. (131m633 sf) in Greenwich, CT. The purchase price was not immediately available. The 13-property disposition is part of a normal churning designed to capture upside and amass capital for another buying spree, Daniel MacEachron, Hines’ senior vice president and the partnership’s portfolio manager, told in June. In a related press release, MacEachron said the sale is being done to take advantage of “the strongest capital market environment in real estate ever.”

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