Starwood Capital Buys Office Buildings for $260.5 Million

Starwood Capital Group LLC, the investment firm led by Barry Sternlicht, bought nine U.S. office buildings for $260.5 million to gain income-producing properties in markets with job growth and limited new supply.

The seller was Wells Real Estate Investment Trust II Inc., a non-traded REIT based in Norcross, Georgia, Starwood Capital said today in a statement. The Class A office buildings include 1.9 million square feet (176,500 square meters) of space and are located in cities including Pittsburgh; Salt Lake City; Charlotte and Winston-Salem, North Carolina; and Orlando and Tampa, Florida.

The buildings, with the exception of the one in Utah, are 95 percent leased, with more than 80 percent of the income derived from investment-grade tenants, Greenwich, Connecticut-based Starwood Capital said.

“Most of these buildings are located in markets with outsized job- and population-growth projections,” Mark Keatley, senior vice president of Starwood Capital, said in the statement.

The purchase price was “significantly” below the replacement cost per square foot, said Chris Graham, a managing director at Starwood Capital, which has more than $22 billion of assets under management.

Wells REIT II, which focuses on office properties, has about 82 buildings with more than 20 million square feet after the sale to Starwood Capital.