Griffin Capital Essential Asset REIT II Buys CA Bank of America Buildings for $57 Million
Griffin Capital Essential Asset REIT II, a publicly registered non-traded real estate investment trust sponsored by Griffin Capital Corp., acquired two Class B office buildings in Simi Valley, California. The properties, which are 100 percent leased to Bank of America N.A., were purchased from two unaffiliated third parties for $57 million, plus closing costs.
The Bank of America acquisition is comprised of a two-story, 206,917-square-foot building located at 450 American Street, and a two-story 273,241-square-foot building located at 1800 Tapo Canyon Road.
The properties are located in Ventura County approximately 40 miles northwest of Downtown Los Angeles. Bank of America has a long-standing operating history in the property, which functions as a home loan mortgage servicing center. The banking institution purchased and occupied the 450 American building in 1992 and the 1800 Tapo building in 1998, executed an 86-month sale-leaseback in November 2013, and recently consolidated employees from local offices into the buildings. In addition, Bank of America invested in a cybersecurity center within the 450 American building, which monitors internal communications and protects external threats to the company and its customers.
The leases are triple-net and expire in December 2020. The current combined annual base rent will be approximately $5.1 million, with 3.0 percent annual base rental rate increases for the remaining duration of the leases. The going-in capitalization rate for the properties is approximately 9 percent.
The purchase was funded with proceeds from the Griffin Capital Essential Asset REIT II’s public offering, a draw of $34.2 million from the company’s revolving credit facility, and $22.4 million in proceeds from a preferred equity investment made by Griffin Capital Vertical Partners L.P. The REIT’s advisor earned approximately $1.1 million in acquisition fees in connection with the acquisition.
Griffin Capital Essential Asset Property Management II LLC will be responsible for managing the property and will be paid management fees in an amount of 3.0 percent of the gross monthly revenues. Griffin Capital Essential Asset Property Management II, LLC has hired an unaffiliated third party to manage the day-to-day operations.
Bank of America (NYSE:BAC), through its operating subsidiaries, provides banking, financial, and real estate products and services for individual consumers, small and middle market businesses, institutional investors, large corporations, and governments worldwide. The company is ranked #23 on the 2015 Fortune 500 List.
Griffin Capital Essential Asset REIT II, Inc. is a publicly registered non-traded REIT with a portfolio that currently includes 16 office and industrial buildings totaling approximately 2.6 million rentable square feet with an asset value of approximately $404 million. The portfolio’s tenant base includes: Aetna Life Insurance Company, American Express Travel Related Services Company, Inc., FedEx Freight, Inc., MGM Resorts International, Owens Corning Sales, LLC, and Wyndham Worldwide Operations, among others.
