Griffin Realty Trust Inc., a publicly registered non-traded real estate investment trust formerly known as Griffin Capital Essential Asset REIT, has sold a majority interest in a 41-property office portfolio, consisting of 53 buildings and one land parcel. The portfolio, valued at $1.13 billion, was sold to an institutional buyer and its operating partner, the names of which were not disclosed by the company.
Griffin Realty Trust said that it selected the properties included in the sale “to align with [its] previously announced strategic monetization process.” The portfolio includes properties with shorter weighted average lease terms and higher estimated future capital expenses in relation to the balance of the portfolio.
Following the sale, the portfolio includes 80 wholly owned office and industrial properties (91 buildings), totaling 21.6 million in rentable square feet, located in 24 states, as well as an equity interest in a joint venture that owns 41 office properties.
Earlier this month, Griffin Realty Trust disclosed details of its “strategic monetization process” that will involve a separation of the REIT by spinning off a new public company that will own a portfolio of primarily industrial assets, as well as certain office assets, and listing that company’s shares on a national exchange. The remaining portfolio, comprised primarily of office assets, will be sold over time, with the net proceeds distributed to stockholders. Once these remaining assets have been sold, the company intends “to fully liquidate and cease operations.”
“We are pleased to complete this transaction which reduces debt on our balance sheet and de-risks our portfolio in consideration of current capital market conditions and the continued pressure that pandemic-related work-from-home trends are exerting on leasing demand and property valuations in the office sector,” said Michael Escalante, president and chief executive officer. “The sale of these office assets advances our recently announced strategic monetization process which is intended to provide stockholders with as much liquidity as possible amid the current capital markets environment while maximizing value. We look forward to continuing to focus on the successful execution of this strategic monetization process.”
Griffin Realty Trust recently declared an updated net asset value per share of $7.42 as of June 30, 2022, a decrease from last year’s NAV of $9.10 per share, which it attributes to a decrease in the value of office properties, partially offset by an increase in the value of its industrial properties. The NAV per share will not updated again as a result of the office portfolio sale.
Eastdil Secured, Goldman Sachs & Co. LLC, and BofA Securities served as the REIT’s financial advisors and continue to guide it through the strategic monetization process. DLA Piper LLP (US), King and Spalding LLP, O’Melveny, and Hogan Lovells US LLP served as legal counsel.
Griffin Realty Trust is an internally managed non-traded REIT that owns and operates a portfolio of office and industrial properties that are primarily net leased to single tenants that the company has determined to be creditworthy.