Class A office building in California sold to Singaporean REIT

Class A office building in California sold to Singaporean REIT
Photo: Courtesy of Manulife US REIT

Singapore-listed Manulife US Real Estate Investment Trust (“Manulife US REIT”) has entered into a purchase agreement with 400 Capitol Mall Owner, L.P. (the “Vendor”) to acquire a freehold 29-storey Class A office building located at 400 Capitol Mall, Sacramento, California for US$198.8 million.

“We are delighted to acquire the top Class A asset, 400 Capitol, Sacramento, California for MUST’s blue chip office portfolio. As the capital city of California, just a drive away from San Francisco and the major tourist destinations of the Napa Valley and Lake Tahoe, Sacramento is a premier business hub with low business and living costs and a flourishing economy driven by healthcare, government and tech. Towering above the CBD, and benefiting from the US$2.0 billion rejuvenation of sports, entertainment and hospitality developments plus a residential boom, 400 Capitol is an address of choice to many leading international and professional service companies,” said Jill Smith, Chief Executive Officer of Manulife US Real Estate Management Pte. Ltd.

”400 Capitol enjoys a strong occupancy of 94.9% and a long WALE of 5.9 years. It complements our existing high quality portfolio by improving tenant and income diversification. Not only is this acquisition 2.3% accretive, based on our 1H 2019 pro forma DPU, but it may also trigger a re-rating story for Manulife US REIT as we inch closer to the FTSE EPRA Nareit Index during its next review,” she added.

Manulife US REIT will finance the total acquisition cost through a combination of loans and a US$142.1 million equity fund raising.

400 Capitol, Class A office asset, is the tallest building in Sacramento, standing at a towering 423 feet high and forming an integral part of the city’s skyline. The Property is widely considered as the premier building in the market and is downtown Sacramento’s address of choice for premier law, financial service, accounting, and professional service firms. The Property has best-in-class features, including distinctive design, an expansive lobby, column free floor plates, 5-star onsite amenity base and highly efficient building systems.

”The Property’s current occupancy stands at 94.9% with a WALE by NLA of 5.9 years, based on committed leases as of 11 September 2019. Over the past 3 years, the property has maintained a high average occupancy rate of 92%. Additionally, within the last 3 years, more than 80% of expiring leases have been renewed, demonstrating a strong retention rate. This is further supported by tenants occupying 11.9% of the Property’s NLA who have forward renewed their leases to 2024 and beyond,” said the company in a press release.