CapTrust Tower at North Hills sells for $98.4 million

Calif. private equity firm acquires 17-story North Hills building

dbracken@newsobserver.comFebruary 2, 2013 

A California private equity firm has acquired the 17-story CapTrust Tower in Raleigh for $98.4 million, a deal that is further evidence of how attractive the North Hills development has become to real estate investors.

KBS Realty Advisors of Newport Beach announced the acquisition Thursday. The CapTrust Tower was developed by Kane Realty and Duke Realty.

Kane Realty, the master developer of North Hills, retains an ownership stake in the building under a new joint venture with KBS. Duke sold its stake in the 300,000-square-foot building, which opened in 2009 and is now 95 percent leased.

“It’s a good number, and we’re excited to be in bed with KBS and looking forward to them being a long-term partner,” said John Kane, Kane Realty’s CEO.

KBS also owns three buildings with nearly 250,000 square feet of space in the Crescent office development in Cary, and the 127,000-square-foot Colonnade One office building on Six Forks Road in North Raleigh.

The CapTrust Tower is the second major piece of North Hills to sell over the past year. In April, Kane Realty sold the Park & Market apartments for $82 million. The price shattered the Triangle record for the most paid for an apartment complex on a per-unit basis.

Jeff Sheehan, a senior vice president with Duke in Morrisville, said with the CapTrust Tower now nearly fully occupied by tenants on long-term leases, it was a good time to cash out.

“Often times that can be the peak of the value,” he said.

The move also fits with Indianapolis-based Duke’s current national strategy of increasing its industrial and medical office portfolio while reducing the number of office assets it owns. Duke still owns 3 million square feet of office space in the Triangle, plus 400,000 square feet of medical and health care space and 3 million square feet of warehouse space.

The CapTrust Tower charges some of the highest office rents in the Triangle, and is home to 18 tenants, including CapTrust Financial Advisors, the American Board of Anesthesiology and RBC Capital Markets. The property includes a six-level parking deck and about 27,000 square feet of retail.

The price KBS paid, about $328 per square foot, reflects how much value investors now place on office properties that are within walking distance of retail, residential and other amenities.

“The initial proposition over there still holds, and in fact has gotten better, I would argue,” Sheehan said.

Kane Realty is also now developing out the remaining North Hills land on the east side of Six Forks Road.

Kane and Concord Hospitality Enterprises are constructing a $40 million Hyatt House hotel that is scheduled to open in late May, and Kane recently broke ground on a 214-unit apartment complex that will be built next to Harris Teeter and Park & Market.

John Kane said Friday that the company is also now in the preleasing phase for a 300,000-square-foot, 19-story office tower that would be built between the CapTrust Tower and the First Citizens Bank building.

Bracken: 919-829-4548

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