In January 2016, Adventus closed on its eighth office property, Barrett Lakes Center, located in the Kennesaw Town Center submarket of Atlanta, Georgia. Barrett Lakes Center consists of three Class A office buildings in one of Atlanta’s premier suburban office locations.
Barrett Lakes Center has 314,604 square feet of leasable space, and was acquired for US $49.75 million, or US $158/sf, significantly below its replacement cost of US $300/sf. The property, which is 96% leased with an average lease term of 6.3 years, includes a development site for a 75,000 square foot building acquired for an additional US $1.0 million. Based on a 3-year average net operating income, the property was acquired at a cap rate of 7.85%. Barrett Lakes Center has a long-standing tenant base averaging over 13 years with the property.
Debt financing for the property was initiated by JPMorgan who provided US $34.53 million of non-recourse first mortgage financing on a 10 year basis at a fixed interest rate of 4.9%.
“The Barrett Lakes Center is our first acquisition in the Atlanta suburban office market, and represents a geographical diversification significant to the overall strength of the Adventus portfolio,” commented Rod Johnston, President and CEO of Adventus. “Barrett Lakes Center is a top tier office asset accessible to high-end neighborhoods and executive communities in the high-growth Kennesaw Town Center submarket of northwest Atlanta.”
“Atlanta has been identified as a premier target market due to its diverse and growing economy, highly trained workforce and low cost of doing business. Atlanta has one of the largest economies in the US, a large concentration of Fortune 500 headquarters, and a long-term job growth rate that is almost three times higher than the national average. This is further evident as Atlanta is home to the world’s busiest airport for passenger traffic, Hartsfield-Jackson International Airport.”
Mr. Johnston continued, “Suburban office market fundamentals in Atlanta provide an exceptional opportunity for yield and growth. Population and job growth have increased annually for the last five years; however new office construction in suburban Atlanta has not kept pace. These fundamentals have put upward pressure on rental rates while remaining vacancies continue to tighten."