Article: Atlanta REIT looks to buy into Key Center
An Atlanta realty company is preparing to invest $312 million to buy into downtown Cleveland's Key Center, which includes the tallest skyscraper between New York City and Chicago and the attached Marriott hotel.
Wells Real Estate Investment Trust said in a Dec. 9 SEC filing that it expects to close the deal by Dec. 23.
The owner of more than $7 billion in real estate, Wells said in the filing that it agreed to make the investment as part of a so-called "recapitalization and reconstitution agreement" signed Dec. 1 with Key Center’s owners, the Richard E. Jacobs Group and the State Teachers Retirement System of Ohio. The state teachers retirement fund and Westlake-based Jacobs Group have been marketing the property for sale since April.
Wells already has made a $20 million deposit on the deal. The filing states that when the transfer occurs, the Georgia investment group will be "entitled to all the benefits of ownership of the Key Center property, including the right to receive all net cash flow from the operations."
Robert Byrd, Wells vice president of corporate communications, said this morning, "We don't have any comment beyond the filing itself. Should the time occur when we can say more about it, we look forward to saying more about it."
Key Tower would become part of a big-league portfolio if the transaction is consummated.
Wells owns the 2.7-million-square-foot Aon Center in Chicago — better known as the former Amoco headquarters — and earlier this year bought an office building in East Palo Alto, Calif.
Wells is a slightly different bird in the high-flying world of trophy real estate. It is a publicly regulated REIT, which triggered the SEC filing, but its shares are not publicly traded on the stock exchanges. Wells owns more than 32 million square feet of commercial property, most of it office, and the balance industrial.
All of the Public Square landmark is involved in the proposed transaction: the 57-story, 1.3-million-square-foot tower that houses KeyCorp's headquarters and white-shoe law firms; the 25-story, 400-room Marriott hotel; and the 1,000-space underground parking garage that serves the properties.
State Teachers spokeswoman Laura Ecklar refused to discuss the proposed sale or the meaning of the obtuse "refinance" and "recapitalize" phrasing before the deal closes.
But what's at work here appears to be a sale, at least on the pension fund's part.
"We have always said we will sell our ownership in the building," Ms. Ecklar said this afternoon. "We are still on course to sell it." The teachers retirement system is selling its stake in the asset because it's overextended in the office sector, she said.
Jacobs spokesman Bill Fullington did not return a call before noon today.
posted by Kathie Bracy at 9:17 AM
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