Represented Workspace Property Trust in Multistate Acquisition of 65 Office Properties Valued at $1.5B

Seyfarth represented a joint venture REIT between Workspace Property Trust and one of the world’s biggest sovereign wealth funds and a public REIT seller in a 65-property, multistate $1.5 billion acquisition. The deal had multiple complications, including: structural complexities of the joint venture REIT; CMBS financing challenges when markets tightened and spreads widened; separation of 12 properties awaiting CFIUS approval; renegotiating the debt into a $736 million balance sheet loan with $194.8 million of mezzanine finance; and simultaneously negotiating document with six Am Law 50 firms.

The Seyfarth team worked tirelessly and closed on 53 non-CIFUS properties on August 26, 2022. The second closing on the remaining CFIUS properties is anticipated shortly after obtaining Federal approval. The Seyfarth team was cross-practice in nature, included leaders in Tax, Real Estate, M&A, Capital Markets, Real Estate Finance, Development, and Bankruptcy.

With 19 million square feet in 23 major metropolitan areas, Workspace is the preeminent national suburban office and light industrial company in the US. Approximately 40% of the Fortune 500 have headquarters in Workspace markets, and nearly 7 million square feet of the Workspace portfolio is leased by companies comprising the Fortune 1000.

More than 66% of the total commercial office inventory in the US is positioned within the suburbs, representing more than 2.5 billion square feet. According to a recent CBRE report, the downtown vacancy rate climbed 40 basis points quarter-over-quarter to 17.4%, while the suburban vacancy rate increased by 20 basis points to 16.9% and the third quarter 2022 marked the second consecutive quarter in which the downtown markets surpassed the suburban vacancy rate. CBRE also stated that within a tight labor market and as employers seek to encourage a return to the office, occupiers will seek locations closer to their workforce and have walkable amenities that provide a superior employee experience.

In a release about the transaction, Thomas Rizk, co-founder, chairman, and CEO of Workspace, said: “We are pleased to complete the second phase of this transformative transaction with the purchase of an additional six Class A office buildings in high-growth, high-value suburban markets. Investing in the suburban office market has evolved quickly from a contrarian play into a sought after, mainstream and competitive sector as the suburbs continue to perform well, characterized by continued robust leasing activity fueled by strong demand from larger, national tenants to increase their footprint outside of central business districts. We see compelling opportunities for growth—both in our existing footprint as well as in select growth markets—and will continue to work with our large corporate partners to deliver solutions to their office needs in the suburbs.”

Roger Thomas, co-founder, president, and COO of Workspace, added: “In the post-post-pandemic environment where millions of Americans want to work closer to home, with short commutes, more affordable housing, and better schools, coupled with the benefits of fully-amenitized and flexible offices, we know that high-quality suburban office properties are the clear solution for corporations looking to provide a safe, accessible, flexible, lifestyle-oriented, and community-based environment for their employees. The integration of the newly acquired properties within our national footprint has gone extremely well and we will continue to invest in our properties, our tenant relationships, our brand and in new innovations to deliver the highest quality experience to each of our tenants and their employees.”

Seyfarth is proud to support Workspace in their mission to provide tenants modern office, light industrial, and industrial spaces with urban amenities in the comfort and convenience of the suburbs.