State Farm to sell newly completed regional hub in Richardson
January 20, 2016
Bloomington, Illinois-based State Farm Insurance plans to sell its new 2 million-square-foot regional hub in Richardson in a deal that could be valued at upwards of $800 million.The insurance company could also sell its two other similar hub campuses in Atlanta and Phoenix.
State Farm Insurance is expected to bring its four-tower regional campus in Richardson to market with the help of Eastdil Secured after buying Dallas-based developer KDC's interest in the property, according to real estate sources. Sources say this is a smart move for State Farm Insurance because its new campus sits on a high-profile, desirable part of the region in a hot real estate market, and the campus could sell for $350 to $400 per square foot, or for a total of between $700 million to $800 million.In a statement, State Farm spokesman Chris Pilcic confirmed the company's intent to sell the properties in a sale-leaseback deal after purchasing KDC's stake in the ownership of the towers.
State Farm Insurance Regional Hub - Arial Photography Inc.
KDC developed the buildings in partnership with State Farm Insurance."It is State Farm’s intent to sell all four buildings in a sale/leaseback transaction in the first half of 2016," Pilcic said, in an email. "Real estate investments help us keep our promise of financial strength to customers. "The four buildings will ultimately house 8,000 North Texas employees upon completion of the campus, which sits in the $1.5 billion CityLine mixed-use development near North Central Expressway and the President George Bush Turnpike.
Overseas investors or a large real estate trust could be attracted to State Farm's regional campus in Richardson because of the company's credit worthiness. As part of the deal, State Farm Insurance is expected lease back the Richardson campus in a long-term agreement (for example, 20 years).State Farm's lease concessions would also play a part in how lucrative this deal would be to a real estate investor. In Richardson, the average lease rate for office space is $21.53 per square foot with a 14.9 percent office vacancy rate.
Candice Carlisle | Dallas Business Journal
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