San Francisco Investor Beats Competition to Buy Powerline Business Park
Cushman & Wakefield closed the $62 million sale of the Deerfield Beach industrial park to Stockbridge Capital Group.
February 12, 2019 at 03:12 PM
5 minute read
Not only were plenty of potential purchasers interested in scooping up Deerfield Beach's Powerline Business Park, but diverse buyers were in play.
The hopefuls varied from private companies to big institutional investors and came from across the U.S., Canada and Latin America.
In the end, Stockbridge Capital Group, a San Francisco-based real estate investment management company, bought the industrial park comprising 24 small-bay buildings from Pompano Beach-based Industrial Development Co. for $62.25 million, or $140 per square foot.
“We received more interest in this than in any other deal in my 25-year commercial real estate experience,” said Scott O'Donnell, who was part of the Cushman & Wakefield team that closed the deal.
Stockbridge took out $31.125 million in acquisition financing from State Farm Insurance Co.
Along with O'Donnell, who is an executive director, Cushman & Wakefield managing director Dominic Montazemi and senior associate Greg Miller, all based in Boca Raton, worked on the transaction. Vice chairman Mike Davis and executive director Rick Brugge, both in Tampa, and executive director Michael Lerner in Orlando also were involved.
Cushman & Wakefield senior director Jason Hochman in Boca Raton, part of the equity, debt and structured finance group, represented Stockbridge in securing the loan Jan. 15.
Powerline Business Park sits on 26.4 acres at 4100 Powerline Road west of Military Trail and about two miles from Interstate 95.
O'Donnell declined to say how many buyers were interested, but he said the Cushman team got more confidentiality agreements from potential purchasers than on any other deal.
Why all the interest?
The Powerline Business Park is comprises small-bay buildings where units are smaller than the usual warehouse size, but the industrial park itself is large at 443,720 square feet, making it a rare offering, O'Donnell and Hochman said.
“The interest came from not only the typical groups that look at small-bay projects,” O'Donnell said. “But because of the scale of this small-bay project being over 440,000 square feet, it attracted institutional groups that normally wouldn't show up for a small-bay product like this.”
Properties like Powerline Business Park rarely come up for sale.
“It's not typical to have a small-bay property of this size on the market. It happens, but it's not common,” Hochman said.
The two families behind seller Industrial Development developed the property from 1984 to 1990, according to O'Donnell.
“They are at a point in time where some of the elder family members are just looking to transition and made the decision to sell this property,” he said.
Stockbridge beat the competition on price, purchase terms and its experience. The company has investments across the U.S. and in various asset classes. Recent buys include a 350,000-square-foot industrial building in Charlotte, North Carolina; the 96,243-square-foot, eight-story Symes office building in Denver; and the 380-unit Broadstone Lofts apartments in Houston, according to its website.
In South Florida, Stockbridge owns the 342,465-square-foot, 20-story 110 East Broward office tower in downtown Fort Lauderdale; the 21,957-square-foot, seven-story Mason retail building in Miami's Design District; and the 139,329-square-foot Fountains of Miramar shopping center.
Given its experience and diverse holdings, Stockbridge is a well-capitalized company. It took out the loan, which covered half of the purchase price, even though it could have bought Powerline Business Park with cash, according to Hochman. He declined to disclose loan terms, saying only it's a fixed rate.
Like with the property transaction, the loan deal also was competitive.
“Lenders love financing very strong companies, and Stockbridge is a national operator. They have a terrific reputation. We've had a ton of interest on this,” Hochman sad. “We chose a lender that gave the most flexibility but also with a very low rate.”
Powerline Business Park was 97 percent occupied at the time of sale. Tenants include construction industries, marine companies and a Dunkin' bakery where most of the doughnuts sold in Broward County are made.
“The actual rent roll was much more diversified,” Hochman said.
Stockbridge, which also focuses on value-add investments, will improve the property, but the potential for rent increases is unclear.
“That's the goal of every purchaser, so it could only be assumed that they intend to do the same thing,” O'Donnell said.
The sale comes in a tight industrial market in South Florida.
In Broward County, the industrial vacancy rate is near a historic low at 3.2 percent, according to a fourth-quarter Cushman & Wakefield report.
“Industrial in general,” O'Donnell said, “is in very high demand.”
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