Phillips Point, the two-tower office and retail complex near the bridge that connects downtown West Palm Beach to Palm Beach, benefits from a prime location in its submarket.
Last month, Related Companies acquired the property for $282 million, marking South Florida’s largest office deal in more than a year. Built in the 1980s, the towers were renovated between 2015 and 2020 by the previous owner, AEW Capital Management.
Related Companies financed its acquisition with a $198.5 million senior CMBS loan from Goldman Sachs, as well as $30.5 million in mezzanine debt.
Ratings documents associated with the securitization of the debt provide an inside look at the property’s finances.
As of December, the 449,000-square-foot property was 91 percent occupied by 31 tenants paying an average annual base rent of $36.60. The top five tenants account for just under half of the building’s total rent roll.
The two largest tenants at Phillips Points are law firms Gunster and Akerman, each with about 50,000 square feet. Akerman, whose lease expires four years later than Gunster’s, pays slightly more rent for slightly less space, at $39.42 per square foot, documents show.
The third largest tenant, investment management company Affiliated Managers Group, pays the most rent per square foot at $48.03. Law firm Greenberg Traurig and investment bank Morgan Stanley round out the top five.
Due to the pandemic, tenants at the building are currently working remotely, although the property remains open. Rent collection has not been impacted, totaling 99 percent in November and 100 percent in December, according to the documents.
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Directly across Lakeview Avenue from Phillips Point, Related has been planning a 25-story office tower called One Flagler, anticipating growing office demand from financial firms relocating to South Florida.
The 200,000-square-foot office development will preserve a historic church on the 2.5-acre site, owned by the First Church of Christ Scientist. The development was made possible by a 2018 rezoning that created the Okeechobee Business District.
A few blocks west, Related is also working on a 20-story, 300,000-square-foot office tower at Rosemary Square, part of a $550 million mixed-use redevelopment previously known as CityPlace.