BUCHANAN STREET PARTNERS AND ACCESS PROPERTIES COMPLETE $110 MILLION INVESTMENT IN SEVEN BUILDING "NOVA" OFFICE PORTFOLIO
The Northern Virginia Office Portfolio (NOVA) is the Largest Investment Transaction to Date for Buchanan Street Partners, and Represents Its First Significant Acquisition on the Eastern Seaboard
RESTON, VA (October 4, 2005) - Buchanan Street Partners, a real estate investment bank, has completed its largest acquisition to date with the purchase of a seven building portfolio in Northern Virginia for $110 million in a joint venture with San Juan Capistrano based Access Property Services.
The $110 million investment is the first acquisition by the joint venture. Access Property Services will act as the managing member of the investment. Buchanan Street Partners provided approximately 75 percent of the required equity investor through an investment from one of its fully discretionary investment funds, Buchanan Urban Investors II.
“Our principal investment group’s business model is to form strategic partnerships with clients who understand their local markets and have the know-how to ensure the success of these ventures. This joint venture with Access Properties perfectly mirrors this strategy,” said Robert Brunswick, president and CEO of Buchanan Street Partners.
The NOVA portfolio is made up of mid-rise, B+ office buildings in the Reston, Fairfax and Tysons Corner submarkets of Northern Virginia. Currently the buildings are approximately 85 percent occupied, including tenants such as Boeing, ITT Technologies, and Raytheon.
According to Steve Blue, senior vice president with Buchanan Street’s Principal Investment group, the NOVA portfolio is located in one of the wealthiest office markets in the country, and possesses great potential for value creation.
“This transaction represents the largest investment to date for Buchanan Street Partners, and the first significant investment for us in the Eastern United States. Our business plan is to first do some maintenance and upgrades on the properties and then begin aggressively marketing and leasing the vacant and rollover space. There is a huge demand for this kind of product in this market right now, “ said Blue.
According to Jonathan Feucht, a principal of Access Property Services, the Northern Virginia commercial real estate posted 1.8 million square feet of positive net absorption in the second quarter of 2005, and saw vacancy rates decline by eight-tenths of a percent from 11.7 to 10.9 percent. In Fairfax City, vacancy rates have fallen to seven percent. A large contributor to this demand has been defense and intelligence contractors. With government and defense spending at historic levels, government expansion is stimulating rapid employment growth, which in turn has helped fuel the commercial real estate market. The largest percentage of procurement funds in Washington D.C. were spent in the Northern Virginia submarkets.
“There are several very positive attributesspects in connection with about this portfolio. First, the vacancy rates for existing office product have been trending downward during the last year and a half and current market conditions indicate that this trend should continue over the next 24 months .Second, in terms of new supply, there is not a lot of product currently available in the market or there is not an abundance of new development currently taking place that could negatively impact the marketplace over the same 24-month timeframe. In addition, the overall economic conditions of the greater Washington D.C. market Second, the market has remain strong, inclusive of one of the lowest or second lowest unemployment rates in the nation and a consistently high rate of new job creation. Together, these ingredients have created an inelastic demand. The other great thing about Finally, several of these buildings is they are beneficially located very near amenities that contribute to the future value of the overall portfolio such as the proposed Metro expansion into Reston .Terminal and one of the buildings has a direct communication link to the CIA headquarters, which is great for defense contractors,” said John Feucht, principal with Access Properties,” said Feucht.
About Buchanan Street Partners (www.buchananstreet.com)
Buchanan Street Partners is a real estate investment bank that provides real estate capital for owners and developers. The firm makes principal equity investments for real estate in a discretionary capacity, arranges debt and structured finance, is an investment manager to institutional and private investors, offers investment sale brokerage services, and has a specialty in self-storage finance. Buchanan Street Partners operates from offices in Newport Beach, Los Angeles, San Francisco, Chicago and Atlanta. For more information, please visit www.buchananstreet.com.
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