Lexington Realty Trust to buy Gateway Plaza in downtown Richmond
Before the first story even went up, Richmond’s newest downtown office project has a buyer.
Larry Chapman, a partner in the project with developer Clayco, said Lexington Realty Trust has entered a contract to buy the 18-story Gateway Plaza upon its completion in 2015.
“This was a negotiated sale from the beginning,” Chapman said. The contract to purchase the 315,000-square-foot building at Eighth and Cary Streets was done at the same time Lexington Realty Trust, a New York based REIT (real estate investment trust), gave Clayco a construction loan. Clayco wouldn’t say how much the construction loan was, but the total project cost is $124 million. Citing a confidentiality agreement, Chapman said he couldn’t disclose the building’s sales price until the deal closes in 2015.
While completion is nearly two years away, “Lexington wanted to get its capital invested earlier, rather than later. So we struck a deal where they could invest a good amount of money during construction,” said Chapman. Summing up the deal, he added, “You’ve got a strong financial institution wanting to buy a good project in a great market with a great tenant,” referring to Gateway’s anchor tenant, McGuire Woods LLP, which has signed a 15-year lease to occupy 217,000 square feet.
Officials from Chicago-based Clayco were in Richmond on Sept. 17 for a groundbreaking ceremony to celebrate the construction of Gateway Plaza with city officials. Richmond’s city government signed on to assist the public-private project with as much as $14 million in city financing. The money will pay part of the cost for a parking garage and includes up to $3 million in performance-based grant money. The sale to Lexington does not affect Clayco’s deal for incentives from the city.
The project includes more than 14,000 square feet of first-floor retail space and a 506-space parking garage. Chapman said no other tenants have signed leases yet. “Now that we’re under construction, we’re getting a lot of activity. The tower crane should go up in a few weeks.”
Lexington Realty Trust owns other properties in the Richmond market. They include the Alstom Power building in Midlothian and three office buildings in Glen Allen, which the REIT has listed for sale.