Bank of America Plaza Changes Hands Again

Wednesday, December 19, 2007 - LAS VEGAS-Bank of America Plaza, a 17-story Downtown office building with an attached seven-story parking garage has changed hands for the second time in less than three years. The Canada REIT that acquired the 254,000-sf building at 300 S. Fourth St. in 2005 sold it to privately held Behringer Harvard last week for $1.4 billion in cash and debt.

Given IPC US REIT’s 9.6 million-sf portfolio, the deal value translates to $145 per sf, below the REIT’s net asset value. For example, industry sources say Behringer Harvard allocated $36.3 million or $143 per sf to Bank of America Plaza, which IPC US REIT acquired in February 2005 for $72 million or $283 per sf.

David Dinniwell, EVP and CFO for the Toronto-based IPC US REIT told GlobeSt.com in August that the pure-play US office REIT started to explore its options as value differentials narrowed between Canadian and US currency. It did consider remaining a publicly traded REIT. "But, our ability to grow with interest rates where they are right now was constrained," Dinniwell said.

The Canadian REIT upped its distribution percentage "numerous times" in the past five years to combat value differences, according to Dinniwell. "The value distribution when converted to Canadian dollars declined due to the appreciation of Canadian dollars since the inception of the REIT," he explained. "Our yields are considerably higher. It seems people haven't appreciated what we've done. It's a function of where our stock prices are trading relative to our distribution. The board decided it was an opportune time to capitalize on current real estate value for unit holders."

Like the rest of the IPC US REIT portfolio, the Bank of America Plaza is a very stable asset for Behringer Harvard. When IPC acquired the property it was 95% leased and that remains true today. Bank of America leases approximately 23% of the building until 2015. Due to the building's proximity to the new Federal Courthouse, the Clark County Courthouse and the new Regional Justice Center, several law firms also occupy the building.

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source: cityfeet.com