Michigan Investor Grabs Office Asset for $15M

ST. PETERSBURG, FL-Farmington Hills, MI-based Lutz Real Estate Investments has acquired the office component of 100 Central Station, a 133,279-sf class A commercial condominium, for $15 million. The property, located in the central business district, was purchased in conjunction with the pension fund advisor Capri Capital Advisors from Jackson, MS-based REIT Parkway Properties.

Acquisition financing was arranged through iCap Realty Advisor’s Michigan office and provided by Merrill Lynch Capital, which was represented by Kirk Booher. The seller was represented by Trammell Crow’s Dale Peterson, of Tampa, and John McRae, of Orlando. Parkway received net cash proceeds from the sale of approximately $14.5 million and will recognize a gain on the sale of approximately $200,000 in the third quarter. Proceeds from the sale were used to repay amounts outstanding under the company’s lines of credit.

The eight-story building was originally designed as a retail and parking complex and consists of commercial space on the first and second floors, which Lutz acquired, and six floors of parking above it. Four floors are owned by the City of St. Petersburg and two stories are owned by One Progress Plaza, which owns the adjacent Bank of America Plaza. The entire property is governed by the South Core Condominium Association.

The property is currently occupied by Progress Energy, which converted the first two floors of the building to class A office space in the late 1990s and has a lease that expires in 2008. In early 2007, the company will move into new headquarters it built in a nearby location. Lutz plans to make a significant capital investment in the property, the exact nature of which will be determined as the property is marketed. Lutz principal Adam Lutz tells GlobeSt.com that the building has great potential because of its 13-ft ceilings and 66,000-sf floor plates. Lutz anticipates that it could be rented to either a retail or office tenant. “We can offer a large block of contiguous space that’s not widely available in the marketplace,” he says.

With this acquisition, Lutz has invested almost $65 million in the Tampa-St. Petersburg market in the past year. Lutz also owns the Tri-County Business Park in Tampa, a 676,000-sf, 20-building office/flex property which it acquired last year. “The Greater Tampa Bay area is a market where we see great opportunity, particularly in the growing 24/7 live-work-play downtown areas,” says Tony Landa, Lutz vice president of acquisitions. “We are continuing to specifically pursue acquisitions in both Tampa and St. Petersburg as part of our overall southeast strategy.”