There's apparently a lot of money to be made in leasing office space to government agencies.
A Washington, D.C.-based real estate investment trust has completed its purchase of downtown Buffalo's prominent Niagara Center building, paying $89 million for the eight-story facility at 130 S. Elmwood Ave.
That's one of the highest prices paid for a single property in Western New York, even eclipsing the $85 million that a New York City investment group paid for the former One HSBC Center in 2005 – when the 38-story office building was fully occupied. Indeed, on a square-foot basis, it's significantly higher: $330 versus $100.
Built in 2004, the 270,082-square-foot Class A office facility is leased primarily to the U.S. Department of Veterans Affairs and the Internal Revenue Service, plus one of the National Labor Relations Board's 26 regional offices. The leases run through 2021.
According to the newsletter, the federal General Services Administration, which handles the government's real estate, pays a total of $7.1 million in annual rent in the glass-and-masonry building.
An entity controlled by Easterly Government Properties bought the building from Acquest Government Leases, according to documents filed in the Erie County Clerk's office.
But according to a report by Commercial Real Estate Direct, an online industry newsletter, the actual seller is Saban Capital Group, a Los Angeles-based private equity investment firm founded by entertainment industry executive Haim Saban.
The sale was part of a much larger national deal, in which Easterly agreed to pay $430 million to acquire 14 properties with 1.48 million square feet that are 94 percent leased to federal agencies. Saban needed cash and flexibility to pay off some of its debt, while the deal delivers a major boost to Easterly, the newsletter said.
Niagara Center was the largest property in the deal. Other properties being acquired are in Chicago; Portland; Parkersburg, Clarksburg and Charleston, W.Va.; Pittsburgh; College Park, Md.; Charleston, S.C.; Sterling, Va.; Baton Rouge, La.; Dallas; and Bakersfield, Calif.
The tenants include the Treasury Department, Social Security Administration, Federal Bureau of Investigation, Food and Drug Administration, Drug Enforcement Administration, Immigration and Customs Enforcement and a courthouse.
The acquisitions of the 14 properties are expected to close on a rolling basis between now and December 2018.