Office Properties Income Trust Announces Two Class A Acquisitions Totaling $ 550 Million
NEWTON, Mass .– (COMMERCIAL THREAD) –Office Properties Income Trust (Nasdaq: OPI) announced today that it has completed the acquisition of two Class A office buildings for a total of $ 550.0 million, excluding closing costs.
OPI acquired the approximately 531,190 square foot Class A office building known as 1K Fulton in Chicago, IL for $ 355.0 million, excluding closing costs, reflecting a current GAAP capitalization rate of 4.7% at closing. The property is 73% leased to Google as the Midwestern headquarters and 99% overall, with a weighted average lease term of 6.6 years. This LEED certified property underwent a complete redevelopment in 2015, is located one block from the roof terraces. The property is in Chicago’s Fulton submarket, which has seen strong population growth and modern, mixed-use residential development attracting Fortune 500 companies such as Google and McDonald’s.
OPI also acquired the approximately 345,917 square foot Class A office building known as Twelve24 in Atlanta, GA for $ 195.0 million, excluding closing costs, reflecting a current GAAP capitalization rate of 6.3% at closing. The property is 96% leased to Insight Global as head office and 98% overall, with a weighted average lease term of 14.2 years. The property was built in 2021, includes direct access to MARTA (the Atlanta rail system), and has many amenities including a fitness center, outdoor patio, cafe, downstairs store pavement and a total of 1,023 parking spaces. The property is located in Atlanta’s Central Perimeter submarket, which is the largest employment center in Greater Atlanta and is home to the Fortune 500 headquarters for Mercedes, State Farm, and Nasdaq.
OPI used cash and drew approximately $ 350 million from its unsecured credit facility to fund these acquisitions. OPI plans to sell other non-core properties as part of its capital recycling program to repay withdrawals made under its credit facility used to fund these acquisitions.
Chris Bilotto, President and COO of OPI made the following statement:
“These two Class A office buildings fit perfectly with our objective of owning, operating and leasing properties that are primarily leased on a long-term basis to tenants with high credit quality characteristics. Since starting our capital recycling strategy in 2020, we have sold over $ 280 million worth of properties and are now excited to redeploy the proceeds in these carefully selected acquisitions of newly built core real estate in strong markets and growing, mainly leased to tenants with high credit quality. By selling older properties, those with shorter lease terms or upcoming vacant units, we have eliminated anticipated rental downtime and significant capital expenditures over the next several years. These new acquisitions improve our portfolio metrics and increase our cash flow. ”
Office Properties Income Trust is a real estate investment trust, or REIT, which focuses on the ownership, operation and rental of properties primarily leased to sole tenants and to individuals with high credit quality characteristics, such as government entities. OPI is managed by the operational subsidiary of Le Groupe RMR Inc. (Nasdaq: RMR), an alternative asset management company headquartered in Newton, Massachusetts.
Warning Regarding Forward-Looking Statements
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. In addition, whenever the OPI uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, ” may ”and negatives or derivatives of such expressions or similar expressions, the OPI makes forward-looking statements. These forward-looking statements are based on OPI’s current intention, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained or implied by OPI’s forward-looking statements due to various factors. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond OPI’s control. For example:
This press release indicates that OPI plans to sell additional non-core properties as part of its capital recycling program to repay withdrawals made under its revolving credit facility used to fund these acquisitions. However, OPI may not be able to successfully sell additional properties in the future or may not realize the proceeds that it may be targeting for such property sales.
Mr. Bilotto says that by selling older properties, OPI has eliminated the anticipation of rental downtime and significant capital expenditures over the next several years. However, OPI may not eliminate rental downtime or capital expenses as much as it wants and it may have additional vacancies or capital expenses required in the future.
Mr. Bilotto declares that these acquisitions are accretive to cash flows. However, for various reasons, these acquisitions may not generate cash flow at expected levels or at all.
Information contained in, or incorporated into, documents filed by OPI with the SEC, including under the heading “Risk Factors” in OPI’s periodic reports, identify other material factors that could cause OPI’s actual results differ materially from those indicated or implied by OPI’s forward-looking statements. . The documents filed by OPI with the SEC are available on the SEC’s website at www.sec.gov.
You should not place undue reliance on forward-looking statements.
Except as required by law, OPI does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
A Maryland real estate investment trust with transferable beneficial interest shares listed on the Nasdaq.
No shareholder, trustee or officer is personally liable for any act or obligation of the Trust.