A New York real estate private equity firm has acquired a 31.57 percent stake in the Wells Fargo Capitol Center, one of the Triangle’s largest office buildings, according to property records.
HighBrook Investors paid $42.74 million for its stake.
The 30-story tower at 150 Fayetteville St. in downtown Raleigh is owned by multiple individuals under a ownership structure called tenants in common, or TIC. A TIC structure allows individuals to own shares of unequal size in a property. Those shares can be transferred to other owners, and HighBrook has acquired its stake through six separate transactions. The first transaction was recorded in August while the other five were recorded Tuesday.
A HighBrook executive didn’t immediately return a call seeking comment Wednesday.
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HighBrook, founded in 2010, targets “previously underperforming income-producing property,” and specializes in “recapitalizing properties that are encumbered by complicated financial structures,” according to the firm.
The price HighBrook paid for its share of the Wells Fargo Capitol Center would value the tower at about $135 million. That is considerably below the $153.4 million that the TIC group paid for what was then called the Wachovia Capitol Center in February 2007, near the height of the real estate bubble.
At the time, the sales price set a Wake County record of $278 per square foot for the 550,979-square-foot tower. The TIC group took out a $120.3 million loan to buy the property.
TIC structures are attractive to small investors because they allow them to obtain fractional ownership in large, institutional-quality properties and can provide steady cash flow if the assets perform well.
The Wells Fargo Capitol Center’s tenants include the Brooks Pierce and Smith Anderson law firms, as well as BHDP Architecture, Wells Fargo and RM Source.
The building had 192,181 square feet – or about 35 percent of its leasable space – available as of Dec. 4, and another 20,451 square feet is scheduled to become available next year, according Xceligent/Karnes. The tower, which was built in 1991, has lost some key tenants in recent years and is poised to lose more.
Last year, the law firm Parker Poe left the building for Highwoods Properties PNC Plaza at 301 Fayetteville St. Parker Poe had leased about 50,000 square feet in the building.
Another law firm, Womble Carlyle, plans to relocate to Dominion Realty’s Charter Square building after its lease at the Wells Fargo Capitol Center expires at the end of the year. It leases 68,000 square feet in the tower.
Bank of America also announced in September that it would move its local offices from downtown Raleigh to a new 18-story tower in North Hills that is scheduled to open in the first quarter of next year. The bank’s Merrill Lynch Wealth Management division now leases space in the Wells Fargo Capitol Center.