Argosy Invests in Devon Square I & II
On August 18, 2011, Argosy Real Estate made a controlling investment in Devon Square I & II, a Class A suburban office complex in Devon, PA. This two-building, 140,000-square-foot asset was 79.9% occupied at the time of investment. Major tenants include Merrill Lynch, Raymond James, and The Surgery Center of the Main Line. The remaining 37.5% partnership interest is held by Keystone Fund I. Argosy’s operating partner is Keystone Property Group (“Keystone”), a fully-integrated real estate investment and development firm, which has acquired 37 office properties encompassing 6.5 million square feet since 1995.
Keystone purchased Devon Square from Equity Office Properties in February 2005 (39.2% occupied) and redeveloped it from Class B office to an institutional-grade Class A asset. The Argosy investment represents a recapitalization of the equity needed to refinance a maturing senior loan. The business plan at closing anticipated creating value through additional lease-up of approximately 20,000 s.f. to achieve a stabilized occupancy of 94%. Since acquisition, a five-year lease for 7,800 s.f. has been executed and a 5,000 s.f. lease is in final review by a prospective tenant. Completing both leases would place the property ahead of plan to achieve 94% occupancy within 18 months of closing.
Argosy underwrote the investment as a four-year hold, although there is potential to sell the asset at an earlier date if a market recovery and/or stabilization of the asset occurs sooner.