Kennedy Wilson Provides $200M Acquisition Loan for Microsoft-Leased Office Campus
PGIM Real Estate and Talon Private Capital landed a $200 million acquisition loan for their recent purchase of Advanta Office Commons, a state-of-the-art office campus fully leased to Microsoft Corporation in Bellevue, Wash., Commercial Observer has learned.
Kennedy Wilson provided the financing, in a transaction negotiated by Cushman & Wakefield (CWK)’s Rob Rubano and Keith Padien.
The asset traded hands for $169 million, according to CoStar Group, making the transaction the largest office sale by total price in the Puget Sound region this year, so far. Honolulu, Hawaii-based The Shidler Group previously paid roughly $225 million for the asset in 2018.
The 600,000-square-foot campus comprises three, seven-story, Class A office buildings and is located at 3005 160th Ave SE in Bellevue’s Eastside office market, one of the most dynamic and supply-constrained office markets on the West Coast.
The property sits on a 14.6-acre site. Two of the three buildings are connected via a 25-foot high, 100-foot long glass roof atrium space that includes a fireplace and water feature. The property also includes a 120,000-square-foot parking garage.
It’s fully leased to Microsoft through September 2023, and has been since the property’s construction wrapped in 2008. The technology giant has one five-year renewal option remaining on its lease and is in good company from a tenant standpoint in the submarket; the campus sits in close proximity to those occupied by other high-growth, big-name tenants, such as Amazon, Facebook, Salesforce and Google.
Kennedy’s Wilson loan covers approximately $120 million of initial funding, and roughly $80 million of future funding for cap-ex and carry costs in the event that Microsoft doesn’t renew its lease, sources said.
The Puget Sound-Eastside office market has continued to garner investor interest throughout the pandemic, buoyed by the tech-heavy nature of its tenant base.
In September of last year, Facebook cemented its commitment to the area when it paid $368 million to purchase REI’s brand-new, 400,000-square-foot headquarters in Bellevue.
And further north, in Redmond, Wash. — the home of Microsoft, as well as Nintendo — Vanbarton Group closed on its acquisition of Millennium Corporate Park last December; a six-building office portfolio that’s 95 percent leased to Microsoft, as reported by CoStar Group. The asset traded for $217 million.
Officials at Kennedy Wilson and PGIM did not return a request for comment. A spokesperson for C&W declined to comment.