Dilweg, in a joint-venture partnership with New York Life, acquired Royal Centre II, III, & IV in August 2015 for $83.5 M ($134 PSF). Dilweg maintained a 5.7% equity interest in the joint venture throughout the hold period. Royal Centre totals 634,500 SF and sits on 37.7 acres in the Royal 400 Office Park in Atlanta’s North Fulton submarket.
Dilweg tracked the assets for 5 years as the properties were in a length pre- and post-foreclosure period. Post-foreclosure rents were low as the special servicer did several short-term and low TI leases to manage cash flow. At the time of acquisition, the Property was 74% leased including major tenants included ACE Limited, MarketSource, VeriFone, and McKesson. Dilweg invested more than $3 million to upgrade the three buildings’ operating systems, common areas, and tenant amenities to reposition the property.
“Royal Centre marks our third successful Atlanta exit. Royal Centre confirmed our commitment to Atlanta metro, leading us to open our first satellite office.”
Drew Cunningham
COO
Dilweg was able to successfully increase in-place rents by approximately 25% and grew the Property’s occupancy by 11% (from 74% to 85%) by executing 114,059 SF of new leases and 211,349 SF of expansion and/or renewal leases. In March 2018, Dilweg and New York Life sold Royal Centre for $107 million ($169 PSF).