TIC Sponsor Acquires Industrial Building

TIGARD, OR-Coe Manufacturing has sold its 155,301-sf manufacturing building here to RealNet Investments LLC of Portland for slightly more than $5 million. The Plainsville, OH-based manufacturer of wood processing systems has leased back the facility for 10 years. RealNet says it will flip the property to a four-investor tenant-in-common partnership in the next week or two for $5.25 million and then continue to manage the asset. The Coe Manufacturing building was constructed in phases from 1959 to 1977. The building is located in the 7900 block of Southwest Hunziker Road, near the intersection of Interstate 5 and Highway 217. “The Coe property has strong fundamentals,” says Scott Fouser, RealNet’s founder and managing principal. “The price is well below replacement cost, rents could easily be attained if Coe vacated, and Coe made a substantial security deposit.”The TIC partnership acquiring the property from RealNet includes a Seattle-area couple in their mid-40s that sold a 30-unit apartment complex they managed in favor of the Coe property, and an individual investor who sold his Gresham industrial building and used the proceeds to take a fractional interest in the Coe property as the up-leg of a 1031 exchange.Realnet says the actual capitalization rate on the investment is just under 8.9%. With some funds held in reserve, the cash-on-cash return is 9.25%, Fouser tells GlobeSt.com.Fouser says his company has completed about 17 TIC transactions since he began operations in 1999, and activity has ramped up rapidly in the past year. “It’s gone crazy,” he says. “We have two deals in Texas underway, another in Phoenix and two more here in the Portland area.”Tom Talbot of GVA Kidder Mathews brokered the RealNet-Coe Manufacturing transaction. The acquisition was financed with a $3.5-million loan from Umpqua Bank that carries an interest rate of just under 6.4%.