German buys 19-story building

Unidentified investor pays $29 million for 300 E. Lombard

July 16, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

An unidentified German investor has purchased a 19-story office building in downtown Baltimore for $29 million.

Denver-based real estate investment company Amstar Group Ltd. bought the building at 300 E. Lombard St. on behalf of a German investor or group of investors, said Philip C. Iglehart, executive vice president/principal of Colliers Pinkard, which brokered the deal for a J. P. Morgan affiliate that owned the property.

"We do not have any idea as to who that particular individual or group of individuals are," Iglehart said yesterday. "It is a growing trend that non-U.S. money sources have been going more and more into Baltimore, partly because we're in the Baltimore-Washington [metropolitan statistical area], and Washington attracts the world's capital."

Until recently, foreign investment in commercial Baltimore properties was relatively rare. But Toronto-based TrizecHahn Corp. paid more than $50 million last year for the debt on an office tower at 250 W. Pratt St., and the Alex. Brown tower at 1 South St. was once owned by Harlan/KDC Associates, a joint venture between the New York's Harlan Co. Inc. and Kajima Development Corp., an arm of a Japanese construction company.

"There is definitely a growing interest" in Baltimore, Iglehart said.

The 300 E. Lombard building has nearly 220,000 square feet of office space, about 3,600 square feet of retail space and an attached garage. The purchase price translates into about $130 per square foot, which is in line with other recent sales.

Iglehart said there were 17 offers for the building, which had been on the market since February. Colliers Pinkard recommended that the sellers choose Amstar's bid, he said, because it was the best offer and Amstar did the most research on the building and area.

"Their proposal in virtually all aspects was the best -- in pricing, time to close, the deposit," he said. "We thought they really did understand the property and the market."

A 28-story Westin hotel planned for 300 E. Pratt St., directly across Lombard Street, would largely block the harbor view that the Lombard Street building now has.

"It will have some restriction on the views that the building enjoys, but our response was that it was good news and bad news: There will be some restrictions, but the good news is that it will not be another office building to create more competition," Iglehart said.

"These people just really understood the building's position in the market and competition, and we felt it could be a force in the office leasing market."

Kristine Stremel, communications manager for Amstar, said the venture is the company's first in Baltimore.

"We purchased the building because it is a Class A building in a supply-constrained market and a healthy economic market, and that makes it a very attractive investment opportunity," she said.

Stremel declined to identify the affiliate that owns the building, other than to say it will be known as AGL No. 11.

The building, whose principal tenants include the law firm Ballard Spahr Andrews & Ingersoll LLP and the health data company HCIA Inc., is 97 percent occupied. Amstar will keep as property manager Jones Lang LaSalle Inc., which also helped broker the deal, and tenants are not expected to notice changes, Stremel said.

Current tenants pay about $21 a square foot, Iglehart said, but the market would support $24, which could translate into about $700,000 more per year for the landlord when the current leases expire.

"While it doesn't happen in year one, it will happen over three or four years, and that's a nice value on a net present value basis," he said.

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