Koll Spending $532 Million on Property
In its largest transaction ever, Koll Co. agreed Tuesday to pay $532 million to buy property in 19 states from Union Pacific Corp, the nation’s second-largest railroad company.
After several months of negotiations, Koll agreed to buy 15,000 acres and 30 buildings, much of it in industrial neighborhoods. Koll, a large real estate developer and one of the West Coast’s largest property owners, plans to build on the land.
Although most of the property is in the West, the deal gives Koll a foothold in several eastern markets, including Washington, and helps the company’s efforts to expand eastward.
With annual revenue of $6 billion, Union Pacific is selling to focus on its transportation businesses and boost its stock price. Its stock jumped $3.125 to $79.75 a share as most transportation stocks rose in Tuesday’s stock market rally. Chairman Drew Lewis said in a statement Tuesday that the real estate sale will help “focus our resources on remaining operations.”
Analysts said the price of $532 million for the real estate was not unreasonable.
UBS Securities Inc., a subsidiary of United Bank of Switzerland, will be Koll’s lender. Koll will buy the property with a partner, which the developer declined to name now. The deal closes in February.
The purchase includes three large industrial parks in Southern California, industrial land in several Northern California cities, an industrial park near Seattle, an office building and land just outside Washington, and five buildings and 1,100 acres near Chicago.
Koll also is acquiring land and buildings in Spokane, Wash.; Salt Lake City; Denver; Las Vegas and Reno; Houston, Dallas, Ft. Worth, Austin and Corpus Christi; Lincoln and Omaha, Neb.; Springfield, Mo.; Little Rock, Ark., and in cities in Oregon and Idaho.
The developer says it owns about $4 billion in real estate on the West Coast, much of it acquired since the company began to buy buildings in the early 1980s. Before then, Koll owned only buildings that it had built itself.
The purchases have since quickened. The company’s previous biggest deal came last year, when it bought $300 million in property from Wells Fargo Mortgage & Equity Trust, a real estate investment trust operated by the big San Francisco bank.
Some of Koll’s most visible projects in Southern California are several big office parks in the John Wayne Airport area in Orange County, which the developer is credited with helping build into one of the largest office markets in Southern California.
Privately held Koll will probably sell the Chicago-area land and buildings, said Koll Senior Vice President Chuck Schreiber, since the company isn’t interested in that market. But it will keep the property in the Washington area, which consists of a six-story office building and enough land to build two more in Arlington, Va.
The deal leaves Union Pacific with 1,000 acres and several buildings--including a Las Vegas casino and an oil field in Long Beach--still to sell. The railroad has already sold $125 million worth of real estate.
