February 18, 2015 – Philadelphia – Affiliates of Philadelphia-based Rubenstein Partners (“Rubenstein”) and its partner Grubb Properties (“Grubb”) have completed the sale of a 485,000 square-foot corporate office campus in North Carolina’s Research Triangle Park to a joint venture between UK-based 90 North Real Estate Partners and Dubai-based Arzan Wealth for $127 million. The transaction, brokered by Cushman & Wakefield, closed approximately 15 months after Rubenstein and Grubb’s acquisition of the then-vacant property, and less than a year after the partnership signed global PC manufacturer Lenovo to a long-term lease of the entire campus.
90 North, which last fall announced the opening of its North American operations in Chicago, views the property as a trophy building with significant upside potential. “This is a great acquisition for 90 North, one that really speaks to our commitment to investing in prime, trophy-caliber assets in North America,” said Daniel Cooper, Partner and Head of the firm’s North American operations. “The Lenovo Enterprise Campus has the stability and guarantee of a Fortune 500 company and the upside potential of the additional space being developed, and available to be developed, all within a prestigious research park environment.” Arzan Wealth, an investment advisory firm registered at the Dubai International Financial Centre (DIFC), and regulated by the Dubai Financial Services Authority (DFSA), acted as Strategic Advisor. 90 North and Arzan Wealth have a long-standing, strategic partnership that has acquired over $500 million of assets around the world, acting as advisors to a consortium of UK and Middle East based investors.
The acquisition also included a nearly 40,000-square-foot building, currently being built as a research and development center for Lenovo. The site can accommodate an additional 100,000 square feet of development.
The campus was not always seen as a trophy, however. The asset had been vacant for several years before Rubenstein and Grubb bought it in December 2013 for approximately $26 million. Rubenstein believed in the property because of its market analysis which indicated a limited supply of both new construction and competing product to accommodate continued demand from major users. Less than four months following the acquisition, Rubenstein and Grubb secured a long-term, triple-net lease with Lenovo, which Lenovo intended to use for its new Enterprise Division created as part of a $2.3 billion acquisition of IBM’s x86 server division. Lenovo’s acquisition required the rapid relocation of the former IBM employees, and Rubenstein was positioned with one of the few large, high-quality available spaces at a competitive price.
“We’re extremely pleased to announce this sale as the conclusion to a very successful value-added office investment,” said David Rubenstein, Founder and Senior Managing Partner of Rubenstein Partners, L.P., a vertically integrated real estate investment manager based in Philadelphia and specializing in office investments in the Eastern United States. “Despite the perceived risk of acquiring vacant suburban assets, there are ways to be successful in this segment. If you thoughtfully analyze the metro region, choose the right submarkets and properties, and position yourself to deliver value to tenants in the form of quality space for a compelling rental rate due to your acquisition basis, you can capture demand from major users and add tremendous value.”
“We took a more nuanced view of the submarket than some investors, which led us to a more optimistic view about the fundamentals of supply and demand in the Research Triangle Park,” adds Dan Doyon, director of acquisitions & regional director for North Carolina and Florida for Rubenstein Partners. “That investment thesis played out very quickly – much more quickly than we ever expected. Because of our vertically integrated team, we were able to quickly connect our in-house construction experts with Lenovo’s facilities group and start a dialogue. This helped to get Lenovo comfortable with some of the engineering challenges associated with retrofitting the building for its use. This combined with the efforts of our business team led to an extremely fast negotiation for a very large lease. All in all, this is a tremendous turnaround story for a property that had been viewed as a classic suburban ‘white elephant.’” Rubenstein and Grubb contributed toward the cost of Lenovo’s improvements as part of the lease.
“This is the second time Grubb Properties has partnered successfully with Rubenstein Partners,” said Clay Grubb, CEO of Charlotte-based Grubb Properties, a leading Southeastern U.S. real estate investment company. “We are proud to have delivered Lenovo an incredible working environment in an extremely tight timeframe.”
David Meline and Samir Idris of Cushman & Wakefield in Atlanta represented Rubenstein and Grubb Properties in the sale of the property with local support from Scot Humphrey and Chris Norvell of Cushman & Wakefield | Thalhimer in Raleigh.
The Lenovo Enterprise Campus is in the heart of Research Triangle Park (RTP), one of the largest research parks in the world and home to many global technology companies. RTP is a $59 billion economic engine that supports more than 50,000 employees and includes 22.5 million square feet of office, flex and light industrial space. The property consists of two, four-story buildings, originally developed by Ericsson.
In October 2014, 90 North announced the opening of its North American operations and the appointment of Daniel Cooper to lead those efforts. The firm also announced its first acquisition, an interest in the FBI building in Denver, CO, at 8000 East 36th Avenue. The four story, 175,155-square-foot Class A office building is fully occupied by the FBI for its Colorado and Wyoming field operations. In November, 2014, the firm acquired The Reserve at Deer Park, a seven-story, 351,425-square-foot office building in Deer Park, IL. The property is in Chicago’s Lake County market.
About Rubenstein Partners
Rubenstein Partners, L.P., founded in September 2005, is a private real estate investment management and advisory firm with operations throughout the Eastern United States. The firm is led by its founder, David Rubenstein, and a group of senior real estate executives, and is focused on directing and managing value-added office real estate investments, primarily in the Eastern United States. Rubenstein Partners’ predecessor company, The Rubenstein Company, LP and affiliates, founded in 1969, was one of the largest private owner operators of Class A office real estate in the Mid-Atlantic, owning and operating a portfolio of assets valued at approximately $1.2 billion at the time of its disposition in 2004. Since 2005, Rubenstein Partners has, on behalf of its investors and clients, invested in more than 10,000,000 square feet of office real estate assets throughout the Eastern United States. For more information, visit www.rubensteinpartners.com.
About Grubb Properties
Grubb Properties, founded in 1963, creates exceptional real estate environments and provides premier customer service for residents and tenants through the repositioning of apartment communities and office buildings and the development of multi-family communities, including the nationally trademarked Link Apartments brand. The company’s fully integrated management team identifies strategies that create long-term value for its clients. For more information, visit www.grubbproperties.com.
About 90 North Real Estate Partners
90 North is an independent investment advisory firm, specializing in socially responsible real estate investment, including Shariah compliant investing. The firm was co-founded by Philip Churchill and Nicholas Judd. James Caan serves as Chairman of the firm. Churchill serves as the Managing Partner and Nicholas Judd serves as Head of Investment. The Founding Partners combine substantial property and other transactional experience, excellent track records with an absolute focus on property fundamentals to deliver superior risk adjusted returns and protect and enhance wealth. Over the last decade, Churchill and Judd have completed a cumulative total of $2.0 billion worth of real estate transactions in Europe and the U.S. For more information, visit www.90Northgroup.com.
Arzan Wealth
Arzan Wealth is an investment advisory firm registered at the Dubai International Financial Centre (DIFC), and is regulated by the Dubai Financial Services Authority (DFSA). Arzan Wealth currently advises various clients on real estate, private equity and other investments worth a total of approximately $975 million. Arzan Wealth focuses on arranging yielding investments in major global markets, as well as bespoke investments that meet the requirements of specific clients.
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