TerraCap’s Value-Add Play Wins Big in Atlanta

December 6, 2019

The firm sold Chastain Center in Kennesaw, Ga., for $46.1 million, after spending more than three years renovating the property.

Chastain Center. Image courtesy of TerraCap Management

In a $46.1 million deal, TerraCap Management has sold Chastain Center, one of its first acquisitions in the Atlanta metro area, to Glenfield Capital.

The 303,000-square-foot, six-building office park is in the suburb of Kennesaw, which has been one of the strongest markets in the Atlanta area in recent months.

The sale comes on the heels of private equity firm TPG making moves in the nearby suburb of Norcross, Ga. After paying $71 million for the 18-building Gwinnett Park office campus, TPG sold a separate 252,698-square-foot business park roughly 2 miles away, after just six months of ownership.

Managed and leased by Lincoln Property Co., Chastain Center is a single-story, Class B office campus that was 86 percent occupied at the time of the sale, with more than seven years of remaining lease terms in place. The first phase of the property was built in 1988, while the second was finished in 1996. The office center is just off Interstate 575 and is within walking distance from Kennesaw State University, a public college with more than 30,000 students.

A successful value-add investment

TerraCap purchased the property in 2016 for $30.1 million from Parthenon Realty, according to data from Yardi Matrix. The sale was subject to a $22.3 million loan from IberiaBank that matures in January 2021. After purchasing the office campus, the firm made numerous upgrades and capital investments to the property during the course of its ownership.

According to a recent Colliers International report on Atlanta’s office market, the metro has experienced continued demand for space, pushing average office rents to a record high of $27.50 per square foot.

In a prepared statement, Director of Asset Management Matt Stewart said that the firm’s purchase of Chastain Center proved to a be a successful value-add investment and is in a desirable location. A CBRE team of Tom Shafer and John Hinson represented TerraCap in the deal.