In Broward County’s most expensive office sale of 2011, a Plantation building that houses the Internal Revenue Service has been sold for nearly $41 million.
Southpointe I, a 3-story, 135,819-square-foot office building at 7850 SW Sixth Court, was sold on May 12 for about $300 per square foot, according to Broward County records. The sale is Broward’s priciest since $170 million sale of Las Olas Centre in Fort Lauderdale in September 2010.
The seller is an affiliate of Spaulding & Slye Investments, a Boston-based member of the Jones Lang LaSalle Group. The Spaulding & Slye affiliate paid about $23 million for the building in December 2002.
GPT Properties Trust, the buyer and an affiliate of Newton, Massachusetts-based Government Properties Income Trust (NYSE: GOV), owns only one other Florida property, which is located in Tampa, according to the company’s website. The trust, however, owns 58 properties in 26 states, 46 of which are leased to different branches of the federal government.
No financing was recorded with the transaction.
Southpointe I was developed on more than 11 acres by Dallas-based Centex Development Co. in 1999. The building is fully leased to the IRS, which has operated its Fort Lauderdale District Office there since the building was completed, according to CoStar Group. The IRS lease expires in April 2019.
Since last summer, institutional investors have been aggressively buying office properties in Broward County’s strongest markets.
“This is a continuation of a trend where core investors are buying quality assets at yields that continue to compress,” according to David Moret, a principal at Coral Gables-based Continental Real Estate Cos. Moret was not involved in the Southpointe I sale.
“With very cheap interest rates right now and a return [for institutions] on the money market of less than one percent, buying stable properties with long-term credit leases are an attractive investment alternative,” Moret said.
Government Properties has likely targeted South Florida for potential investments, but the region “is not a market that has many large government tenants” to meet the REIT’s stringent investment criteria, Moret said.
Last August, Duke Realty Corp. paid $100.4 million, or about $216 per square foot, for the Royal Palm at Southpointe complex at 900 and 1000 S. Pine Island Road in Plantation.
The Royal Palm sale, at nearly $85 per square foot less than the Southpointe I sale, reflects the premium Government Properties paid for the IRS building.
Royal Palm “is arguably the best product in that market,” according to Jay Caplin, managing principal at Miami-based Steelbridge Capital. Caplin was not involved in either sale.
The only comparable recent sale, involving a federal government tenant, to the Southpointe I transaction was the $95.1 million sale of a four-building U.S. Citizenship and Immigration Service portfolio in June 2010, Caplin said. In that transaction, a Virginia-based investment fund paid more than $486 per square foot for the portfolio.