Preferred Apartment Communities has agreed to sell an office portfolio to Highwoods Properties for $769 million. The deal, which includes 1.8 million square feet in Charlotte, N.C., Raleigh, N.C., and Atlanta, is slated to close in the third quarter. Highwoods intends to finance the purchase with the sale of a number of its non-core office properties.
The largest part of the portfolio is in Raleigh, comprising the 560,000-square-foot Wells Fargo Capitol Center at 150 Fayetteville St. in the city center and the 300,000-square-foot CAPTRUST Tower in the North Hills submarket. This marks the second major acquisition Highwoods has made in Raleigh this year alone: In January, the company paid $131.3 million to acquire a full ownership stake in The Forum, a 636,000-square-foot campus 10 miles from downtown.
The portfolio also includes two properties in Charlotte: the 479,000-square-foot Capitol Towers and the 291,000-square-foot Morrocroft Centre. PAC acquired the two Capitol Towers in late 2018 for $208.8 million, according to CommercialEdge data, with the three-building Morrocroft Centre fetching a $107.6 million price tag in December 2019.
Non-core Atlanta component
In addition to the four assets in North Carolina, the portfolio also includes several non-core properties in Atlanta. Armour Yards, a creative office campus which delivered in 2016 and 2017, totals 187,000 square feet and is located near another asset that was part of the transaction: a 36,000-square-foot office building at 251 Armour Drive NE. Due to Highwoods’ preferred focus on core office properties, PAC will continue to market these assets for sale to a third party.
Finally, the portfolio will include a mezzanine loan to build 8West, a nine-story building in Atlanta’s Midtown district. The 195,000-square-foot project would replace an existing, 123,501-square-foot single-story office asset that PAC acquired in late 2016.