Allegiance Realty buys Archon's portfolio

Real Estate Weekly, Feb 16, 2005

Continuing its targeted national expansion program, Allegiance Realty Corporation announced that it has acquired eight properties spanning 1.23 million s/f of space from the Archon Group in New Jersey. Allegiance acquired these assets with Rockpoint Group, LLC as their institutional equity partner with an acquisition and redevelopment loan from iStar Financial that was arranged by the Ackman Ziff Real Estate Group.

"We are very proud to announce the acquisition of these outstanding New Jersey assets from Archon," said Christopher Smith, CEO of Allegiance Realty Corporation. "This acquisition allows Allegiance to enter one of the toughest 'barrier-to-entry' markets in the country in a critical mass strategy. This was a win-win transaction where all parties worked extremely well together to close this complex transaction in a timely and efficient manner." Scott Sambade, director of acquisitions and finance with Allegiance Realty Corporation, added, "Congratulations to the entire team of professionals who worked diligently on this multifaceted transaction.

This portfolio of assets provides Allegiance with a significant presence in several of New Jersey's prime office markets. Situated along the I-24 and Route 287 corridors, in the heart of the state's most desirable business region, each of these properties was acquired allowing for significant upside potential. We have over $30 million of capital that will be reinvested into these assets, including improvements to the lobbies and renovations at all of the properties.

This capital improvement program and our ability to execute below-market leases provides a very compelling leasing opportunity for tenants." Allegiance plans to open an on-site office located at 500 Atrium Drive in Somerset. Grubb & Ellis will continue to act as property manager for the portfolio and will assist Allegiance with the transaction.

The properties being acquired by Allegiance include:

The Atrium Drive portfolio, consisting of four class A office buildings in the Somerset County/I-287 corridor. 300 Atrium Drive contains 147,474 s/f, 400 Atrium Drive contains 354,670 s/f, 500 Atrium Drive 169,212 s/f and 700 Atrium Drive 181,069 s/f.

Garden State Exhibition Center, one of the top three convention centers in the state, located at 50 Atrium Drive in Somerset and consisting of 82,000 s/f.

379/399 Campus Drive in Somerset, totaling 199,757 s/f.

And 25/35 Airport Road in Hanover township, a class A office building totaling 96,207 s/f.