American Industries' Bob Savage tells GlobeSt.com that he was made aware of the property by the firm that manages its properties, Elliott & Assoc., which also managed Highlands Plaza. "Portland has a large pool of qualified buyers that quickly will snap up purchase opportunities in this size and yield range," says Savage, "so we're glad Elliott managed it and brought it straight to us."
To finance the purchase, American used proceeds form a recent land sale in Sacramento. "The deal was brought to us about 40 days before we purchased it and it just happened to coincide with our sale in Sacramento and the seller's desire to close prior to June 1," Savage tells GlobeSt.com.
Indeed, Savage says the seller's desire to close quickly also resulted in American having a guarantee that its first-year income stream from the building will be equal to a 9.5% cap rate; if it does not, the seller will make up the difference, says Savage.
"We felt that for our entry into office properties, medical dental was a pretty safe type of building and tenant mix to get involved with, because of the stability and consistency that those types of tenants historically provide," says Savage. "We also thought it was an interesting submarket in that it wasn't competing with other Downtown buildings or the flex space further out Highway 26."
Located at 5440 S.W. Westgate Dr., the building is made of steel construction with hung concrete panels. It has 35 tenants each leasing about 1,400 sf. "Prior to closing of the Sacramento sale, target exchange properties were few and far between and the offering cap rates were so low that wasn't much for us to get excited about in terms of doing an exchange," says Savage. "So we were just tending to business when the opportunity turned up and fit real well in terms of size and being as safe a product type and tenant mix as we could possibly get and still see a good yield."
Located on Naito Parkway, American Industries is the holding corporation for the assets of Howard Hedinger, the former owner and current partner in American Steel. The company has holdings in real estate and private placement securities as well as an interest in American Steel. Until lately, the real estate holdings have consisted mostly of industrial and retail, including holdings in Salem, Ore., Longview, Wash., and Lake Oswego, Ore.
Earlier this year, American joint ventured with Portland divorce attorney Jody Stahancyk and her husband, John Crawford, in the purchase of the former Great Western Chemical headquarters, a 20,000-sf building at 15th and Yamhill in Downtown Portland that is known as the McCall Building. Stahancyk's law firm will be the building's anchor tenant.
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