Parkway Properties to Purchase Hearst Tower

By Eliza Theiss, Associate Editor

Investor confidence in the Charlotte office market seems to be on the rise. Following the recent sale of the Coliseum Centre, dubbed ‘deal of the week’ by The Wall Street Journal, another multimillion dollar office property transaction is in the works in the Queen City.

Parkway Properties, an Orlando-based real estate investment firm, has announced the purchase of Bank of America’s Hearst tower at the steep discount price of $250 million, or $257 per square foot.  Located in Charlotte’s central business district at 214 North Tryon Street, the 47-story building is the fourth largest in the state of North Carolina. The building is 94 percent occupied, with no leases expiring before 2017. Bank of America is selling the 972,000-square-foot property as part of a cost-cutting plan announced earlier this year. After the sale is finalized, the bank will enter a lease agreement for 322,000 square feet through March 2022.

The purchase of the office tower will initially be financed using proceeds from TPG’s recent $200 million equity investment in Parkway and loans on the firm’s credit facility. The company projects the property to generate a net income of $17.5 million in the first year of ownership, according to a press release issued by Parkway.

Barclays Bank PLC—a global financial service provider engaged in retail, commercial and investment banking, and wealth and investment management—is Parkway’s acting financial advisor, while Jaeckle Fleischmann & Mugel LLP, Hogan Lovells US LLP and Forman Perry Watkins Krutz and Tardy LLP are acting legal counselors for the firm in both the Hearst Tower transaction and in connection with TPG.

Parkway Properties is a self-administered real-estate investment trust specializing in ownership of specialized office properties in higher-growth submarkets in the Sunbelt region, owning or having interest in 43 properties for a total of 10 million square feet of office space. TPG is a global investment firm with $49 billion of assets under management.

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Photo courtesy of jbarrieros via Flickr.com