Thursday, June 6, 2013

Parkway Properties Assumes Majority Interest in US Airways Headquarters

US Airways Headquarters, Tempe, AZ
VIZZDA—June 6th, 2013 — An ownership group comprised of W.P. Carey & US Airways sold a 74.58% interest in the US Airways Building at 111 W Rio Salado Parkway in Tempe to Parkway Properties for $41.765m. In conjunction with its acquisition, Parkway issued $13,944,746 in new debt to the entity controlled by W.P. Carey and US Airways. The sale price is reflective of a March 15th, 2013 agreement valuing the property at $56M. According to a previously released prospectus by Parkway Properties:  

The office building is the headquarters for US Airways, which has leased 100% of the building through 2024 with a current in place net rent of $17.50. US Airways has a termination option on December 31, 2016 and December 31, 2021 with 12 months prior notice. US Airways is also the owner of the remaining approximate 25% interest in the building and has a right of first refusal that allows it to purchase the interest that we intend to purchase for a period of 30 days after receipt of formal notice of the proposed transaction... Full text found here.

The 218,000 ft2 9-story building west of the southwest corner of Mill Avenue and Rio Salado Parkway was built-to-suit US Airways’ predecessor in 1999. It sits on 3.73 acres, zoned CC and features a 655-space parking facility. The upper floors house executive management while 164,870 ft2 of the building services as a flight center, providing logistical and operational support for US Airways. The building was awarded LEED Gold in 2009 and received EnergyStar ratings from 2000 to 2012.

From the earliest stages of planning, the Government Property Lease Excise Tax (GPLET) sale-leaseback structure was utilized to promote the development of the site. In this instance, America West Airlines initiated a sale-leaseback of an 80% undivided interest in the property to the current seller on February 26th, 1998 for $3.05m. W.P. Carry and America West Airlines executed a 15-year lease, commencing May 1st, 1999 and expiring in 2024. Further insight into GPLET can be found here.


The GPLET incentive was realized as the tenant-in-common stakeholders sold their ownership interests to the city of Tempe and leased the property back. The lease term was for 8 years, scheduled to end July 30th, 2008, but instead expiring on June 25th, 2007 per a termination option. At that point, ownership reverted back to tenant in common ownership structure with different percentage interests; WP Carey 75.58% and America West Airlines to 25.42%. America West Airlines and US Airways merged in 2005 with the new company adopting the US Airways name and the America West Airlines headquarters. 

The remaining lease termination options are scheduled for December 31st, 2016 and December 31st, 2021. US Airways is currently in the process of merging with American Airlines.


By:
Daniel Alpers
Director of Planning & Municipal Projects

Hadden Schifman
Managing Director

Paul Dionne
Director of Analytics

Vizzda.com 

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