CarterBlog

Carter Validus Agrees to Buy Data Center Space at 180 Peachtree

Last week, Carter Validus Mission Critical REIT, Inc. filed a report with the Securities and Exchange Commission for its pending acquisition of 180 Peachtree. See the filing below.

On November 18, 2011, through a wholly own subsidiary, Carter/Validus Operating Partnership, LP (“CVOP”), the operating partnership of Carter Validus Mission Critical REIT, Inc. (the “Company”), entered into an agreement with Carter Validus Properties, LLC (the “Assignor”), an affiliated entity of the Company, to assume all of the Assignor’s right, title and interest in a Purchase and Sale Agreement together with The First Amendment to the Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Peachtree/Carnegie, LLC (the “Seller”), which is not affiliated with the Company, its advisor or affiliates, for the purchase of 100% of the Seller’s interest in an approximately 338,000 square feet leased data center and parking facilities (“180 Peachtree”), located in Atlanta, Georgia. 180 Peachtree is currently 100% leased to six tenants. The Assignor entered into the Purchase and Sale Agreement on October 12, 2011, which was amended on November 18, 2011. The terms of the Purchase and Sale Agreement provide for a purchase price of $94,750,000, plus closing costs. On November 18, 2011, DC-180 Peachtree, LLC, a subsidiary of CVOP, was formed to acquire and own 180 Peachtree.

The Purchase and Sale Agreement provides for (i) a non-refundable initial earnest money deposit of $2,000,000, a second earnest money deposit of $500,000 that was paid on November 21, 2011, and a third earnest money deposit of $3,500,000 due on December 2, 2011, for a total earnest money deposit of $6,000,000, which will be applied towards the purchase price on the completion of the acquisition of 180 Peachtree and which will be non-refundable unless the Seller defaults on its obligations under the Purchase and Sale Agreement; and (ii) an anticipated closing date of January 3, 2012; however, at the Company’s election, the closing date may be extended to a date no later than January 18, 2012 by providing an additional earnest money deposit of $1,000,000. The Purchase and Sale Agreement also contains closing conditions such that the Seller must provide subordination and non-disturbance agreements and estoppel letters for the tenants by the closing date or the Company can terminate the contract and receive a refund of the earnest money deposits. The Purchase and Sale Agreement also contains customary covenants, closing conditions, representations and warranties, and indemnification provisions.

 

Carter Expert Gives Update on Capital Markets

By Michael Seton, executive vice president of Investments and Advisory, Carter

NEW YORK (Oct. 19, 2011) - At Carter, we keep a close eye on capital markets. The commercial real estate finance market has seen a significant negative jolt over the past four months - the significant sell of the public equities and fixed income markets has had a correspondingly negative effect on the U.S. real estate debt markets.  

By way of example, in April 2011, AAA CMBS spreads were approximately 175 basis points over the 10-year swap rate but had backed up to over 300 bps over the equivalent swap rate in early October 2011.  

On a typical 60 percent loan-to-value loan, the coupon can be well in excess of 6 percent (versus sub 5 percent previously).  Despite Treasuries bonds dropping to all-time lows, lenders haven't necessarily dropped their absolute rates, which has led to spread widening to levels we only observed at the depths of the financial crisis in 2008 and early 2009.  

Borrowers are turning to balance sheet lenders in droves because the risk of the bond markets widening further is too great.  The challenge for borrowers is that insurance companies put out big dollars in early 2011, and are, as a result, largely getting full on quota.  

Banks remain under pressure from both residential mortgage woes (as evidenced by the constant headliners in the Wall Street Journal and The New York Times) and capital and other regulatory requirements, and as result remain reluctant to aggressively lend.  

Until the European crisis is resolved (which likely won't occur until more pain is endured, including the inevitable Greek default), we will continue to see volatility and lack of confidence by lenders in the real estate finance world.

 

Carter Validus Mission Critical REIT Acquires $28.9 Million Data Center

TAMPA, Fla. (July 19, 2011) - Carter Validus Mission Critical REIT, Inc. (“CV REIT”) announced on Friday that it has acquired a $28.9 million data center in Richardson, Texas.

The property is 100% leased by a Standard & Poor’s AA rated (as of November 2010) national health organization. The company, which wishes to remain anonymous for security reasons, operates in 19 states and includes 72 hospitals; 40 long-term care, assisted- and residential-living facilities; two community health-services organizations; and home health agencies. With annual revenues of approximately $9 billion, the tenant is one of the nation’s largest health care organizations.

John Carter, CEO of Carter Validus Mission Critical REIT stated, “We are thrilled to acquire this data center as we believe it fits perfectly within our mission critical investment strategy. The property is a well-located data center leased to an investment-grade healthcare tenant. We were able to acquire this property at a purchase price and with financing terms that support our declared distribution rate.”

The 20,000 square foot facility is located on 1.52 acres in the Dallas-Fort Worth area in an established technology corridor. The data center supports the deployment of technology infrastructure equipment on over 10,000 square feet of 36 inch raised floor space. There are diverse feeds from two power substations that provide redundant power supporting 1.68 megawatts of critical load power (expandable to 2.25 megawatts). Additionally, dual generators and a resilient air cooled chiller infrastructure contribute to increased reliability in support of continuous 24/7/365 operations.

Carter Validus Mission Critical REIT, Inc. is a public, non-traded REIT. The REIT intends to acquire mission critical real estate assets located throughout the United States. Mission critical real estate assets are purpose-built facilities designed to support the most essential operations of tenants. Carter Validus Mission Critical REIT, Inc. will focus its acquisitions on mission critical assets in three distinct real estate sectors: data centers, healthcare and education.

Carter Invests in Class A Apartment Community in Jacksonville, Fla.

By Malloy Peterson, vice president of marketing, Carter

ATLANTA (Dec. 28, 2010) - Carter has joined with Wood Partners and Lubert-Adler to invest in Magnolia Village Apartments, a class A rental community in Jacksonville, Fla.

The apartment community, located at 1620 Bartram Road in Jacksonville's desirable Southside neighborhood, comprises 168 units in six buildings. The Wood Partners-led investment group acquired the complex "on a short-sale basis at a significant discount to replacement cost," Wood Partners said today in a press release announcing the acquisition.

Carter decided to invest in Magnolia Village Apartments because of the opportunity to acquire a high-quality asset at a price well below what it would cost to replace it. Moreover, investing in Magnolia Village offered Carter the change to fortify its presence in the Jacksonville market.

"Magnolia Village presented an opportunity to acquire a class A multifamily asset at a price below replacement cost, in a market Carter believes in, with strong operating and capital partners," said John Akin, a senior vice president in Investments & Advisory who oversees Carter's multifamily investments. "It is the perfect complement to our recent acquisition of Valencia in Ponte Vedra."

In September, Carter Real Estate Fund II acquired Valencia, a distressed condominium complex just outside Jacksonville. Carter is marketing the remaining available condos at Valencia and has land for the development of future units there.

Magnolia Village is a gated apartment community offering one-, two- and three-bedroom apartments as large as 1,513 square feet. The landscaped grounds include a clubhouse, resort-style swimming pool and poolside Wi-Fi access.

"Magnolia Village fits the direct center of our strategy to buy well-constructed, well-located assets in stabilized submarkets that exhibit stabilized cash flow with room for growth," said Jay Jacobson, director of national acquisitions for Wood Partners. "We found the near-in Southside area attractive due to its infill nature, which was further enhanced by the adjacent redevelopment of a Publix grocery store that anchors a new neighborhood shopping center - a convenient amenity for our residents."