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Falcon Completes Sale of Cox Communications Building

Falcon Real Estate Investment Company LP recently sold the Cox Communications Building located in Herndon, Virginia. This is a two-story 94,170 square foot office building that was built in 2002 as a build-to-suit for Cox Communications. Cox is one of the largest cable providers in the United States and has an investment grade credit rating. The property is adjacent to the Washington Dulles International Airport via the Dulles Toll Road, Route 28 and I-66. The property was leased to Cox on an absolute, triple-net basis through April 2017.

This property was acquired in June 2002 by a syndication that was put together by Falcon Real Estate. The total cost of the acquisition including capital reserves, fees and expenses was $21,150,000. The capital structure consisted of a first mortgage, provided by John Hancock Real Estate Finance, a portfolio loan, provided by a group of overseas investors, and equity, which came from US investors. As planned at the time of purchase, the property was held for five years, until the fifth lease year when Cox’s rent increased by fourteen percent. The property was then sold at a price of $29,700,000, with ten years still remaining on the lease. Equity investors were able to achieve a 10.2% annual income return and an overall Internal Rate of Return of over 21%.

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August 2007