Office Building in Charlotte successfully sold

In June 2018, the A-class office property at 615 South College in Charlotte, NC, USA, an investment in the COS-Portman US Fund I, was successfully exit. The asset was sold to a renowned American institution represented by CBRE Global Investors for the price of 222 million US dollars. The unit price of $590 per square foot set a new record in the history of Charlotte office market.

The building has a stable tenant structure which consists of core tenants such as Regions Bank and WeWork, law firms such as BDO and Direct Digital and architectural companies. The performance of the project exceeded expectations at the time of investment. The transaction price was far above the underwritten exit price and the deal generated excellent returns to investors.

The Charlotte office project, with a total cost of $127 million, was jointly invested by COS Capital and Portman Holdings in August 2015. The senior loan was funded by PCCP, a well-known local financial institution. The 18-floor Class-A building has a gross area of 390,000 square feet a leasable area of 370,000 square feet, and 1400 parking spaces.

Charlotte is one of the strategic markets that COS-Capital focuses on long term. According to research from PWC, Charlotte ranked in the top 3 of the most promising cities in the United States for the year 2015. It is also the nation’s second-largest financial center. Seven Fortune 500 companies are headquartered here, including Bank of America, Wells Fargo, and Duke Energy. Continuous economic recovery and growth have reduced unemployment and office vacancy rates to historic lows since 2008, while rents continue to rise.

At the time of investment, the vacancy of Class A office buildings downtown was 7.8%, and the occupancy of the four most recent office buildings constructed was as high as 99.5%. The market was experiencing strong demand for high-quality office space while the supply of new Class A office space was close to zero.

Under such circumstances, COS-capital seized the opportunity. The final performance of the project demonstrates the foresight of the COS-Capital’s investment team. In addition, excellent partners, effective communication, close cooperation, a professional operations team and a little bit of luck were also critical to achieve this remarkable result.