Downtown Lilly building fetches $90 million

An affiliate of Eli Lilly and Co. has sold a high-profile downtown building formerly occupied by the pharmaceutical giant for a reported $90 million.

A Lilly spokesman acknowledged the sale closed May 9, but declined to divulge the price or the buyer, saying only that a real estate investment firm acquired Rolls-Royce Meridian Center, formerly known as the Faris Campus, on South Meridian Street.

But real estate sources familiar with the deal provided the acquisition price and named the purchaser as American Realty Capital, a real estate investment firm based in New York City.

“The firm was interested in the property due to its long-term lease and high-quality tenant, and it’s in a central business location,” Lilly spokesman Ed Sagebiel said.

The entire 405,000-square-foot complex is occupied by Rolls Royce Corp., an aircraft engine maker, which announced in March 2011 that it would lease the property from Lilly.

Rolls-Royce has more than 4,000 employees in Indianapolis, including 2,500 at its downtown location.

More than nine years remain on Rolls Royce’s lease, making the building an attractive investment for American Realty Capital, said Rebecca Wells, vice president of capital markets for the Indianapolis office of the Jones Lang LaSalle brokerage.

“This is a great sale,” she said, “and it just reflects the attractiveness of Indianapolis to institutional investors.”

Class A office properties have found their way back to market recently as the financing environment for real estate transactions has improved. Lilly put the building on the market about a year ago.

Just last month, Hertz Investment Group announced that it had completed its purchase of the nearly 650,000-square-foot Capital Center downtown.

Hertz, based in Santa Monica, Calif., bought the two-tower complex and the 525-space underground parking garage from an Invesco-managed German fund that had owned the property for about 12 years. Terms of the purchase were not disclosed.

The towers at 201 and 205 N. Illinois St. make up the 12th-largest office complex in the city, according to IBJ statistics, and the fifth-largest downtown. They’re 78-percent leased with net operating income of $4.5 million.

Rolls Royce Meridian Center includes more than 320,000 square feet of office space, a 48,000-square-foot fitness center, and a cafeteria and conference center. It has more than 2,000 parking spaces, mostly in a multistory garage.

Rolls-Royce invested about $20 million to modernize and occupy the once-vacant building.

Lilly began construction on its $58 million Faris campus in 2001 with development partner Kite Realty Group Trust and it opened the following year.

In June 2010, Lilly moved 1,000 employees from Faris to its Lilly Corporate Center complex on McCarty Street as ongoing staff cuts reduced need for the space. The company also wanted to locate its employees on the same campus as part of a new business structure.