The 777 Building - officially known as Eisenhower Plaza and now bearing the Thomson Reuters name - is located at the I-94/State Street entrance to the city.

Lon Horwedel | AnnArbor.com

What’s the 777 Building in Ann Arbor worth?

Hint: It's more than you'd think, given recent commercial real estate trends.

The answer is $65.2 million, based on what buyers of the landmark office tower paid in June.

That’s according to documents released today by the buyer: CommonWealth Real Estate Investment Trust, the new name of publicly held REIT, formerly known as HRPT.

The sales figure reflects a price of $159 per square foot for the 410,000-square-foot property, which includes the 10-story office tower at the corner of South State and Eisenhower and the building just east of it that’s leased to Proquest.

The sales price, unavailable until Commonwealth released its second quarter results today, is higher than the building’s estimated market value of $53.2 million, based on the $26.6 million city assessment.

According to information released on a conference call that started at 1 p.m., the cap rate - or rate of return based on purchase price and net operating income - for the 777 building’s purchase was 9.4 percent.

Further, based on those numbers, that means that the NOI of the property - at 88 percent leased to 16 tenants - is $6.128 million.

So how do those numbers fit into Ann Arbor real estate?

First off, it shows the difference between a leased building today and speculation at the bottom of the recession. The 174-acre ex-Pfizer site sold for $108 million, in a deal announced in late 2008 - so the leased 777 Building was acquired for about 60 percent of the cost of the empty 2 million-square-foot complex.

Further, the size of the building and the price are both larger than the city is used to seeing. The price per square foot is higher than most local deals since 2008 tightened the credit markets. In 2007, some properties were flirting with the $200 per square foot plateau, like the Black & Veatch Building on Green Road. Since then, empty buildings in some locations are selling for well under $50 per square foot.

This deal also shows the return of public real estate investment money to the region and what it can mean to building prices. One other example from better times: Arborland Mall sold at a 6 cap rate in 2005 - or about $250 per square foot.

Meanwhile, the lower the cap rate, the lower the risk - and the higher the price, according to real estate principles.

The 9.5 cap rate for the 777 building signals moderate risk for CommonWealth - but it’s also far less than many deals struck in Metro Detroit in recent years. We can look at that as a sign of Ann Arbor's relative stability for investors.

Commonwealth, then operating at HRPT, bought the building in June from an entity of Chicago-based Transwestern Great Lakes LP.

The Ann Arbor building purchase was one of eight in the second quarter by CommonWealth, based in Newton, Mass. [NYSE: CWH]. It also entered agreements to buy 11 more, while making plans to sell 15.

Overall, the company owns 521 properties totaling 67.5 million square feet.

The REIT has a market capitalization of $1.74 billion as of today, when its stock was selling at $26.92 per share.

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.