Griffin Realty Trust, Inc., a blue-chip landlord and non-traded real estate investment trust, announced selling its majority interest in properties worth more than $1.1 billion. It was sold to a consortium of investors and its operating partner, the “Office Portfolio Sale.”
According to the release GRT will retain its minority stake in the portfolio, with the consortium, led by Workspace Property Trust, also buying a majority interest in the properties sold.
“We believe the pandemic really accelerated the shift to suburban offices,” Workspace’s co-founder and chief executive, Thomas Rizk, told the Wall Street Journal.
The portfolio comprises 53 Class A buildings across 41 properties in eight states, and a land parcel spanning approximately 800 million square feet. The company says it selected properties with shorter average lease terms and “higher estimated future capital expenses in relation to the balance of GRT’s portfolio,” as part of its monetization strategy.
Most of the buildings are located in Atlanta, Dallas and the San Francisco Bay Area, according to the WSJ.
GRT president and CEO Michael Escalante says that the sale of these properties will reduce debt on the company’s balance sheet and reduce risk in the current market. He says this is due to pandemic-led work-from-home trends affecting leasing demands and property valuations in the office sector.
“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,” he stated in the release. “We look forward to continuing to focus on the successful execution of this strategic monetization process.”
As companies are introducing new work-from-office mandates in a post-pandemic setting, this deal is expected to reap the benefits of acquiring suburban offices near residential areas.
Financial advisors for the sale included Eastdil Secured, Goldman Sachs & Co. LLC, and BofA Securities, which strategized the monetization process. DLA Piper LLP (US), King and Spalding LLP, O’Melveny, and Hogan Lovells US LLP also served as legal counsel for Griffin Realty Trust.
The firm also noted that its net asset value was last updated on June 30, 2022, and will not be updated again as a result of the Office Portfolio Sale.
JPMorgan Chase and Bank of Montreal are providing $930.8 million in balance sheet financing to GIC and Workspace Property Trust for this acquisition, according to Commercial Observer. Singapore-based GIC Pte. Ltd. is also investing in the portfolio along with Workspace, according to the WSJ.