"This was an asset that was highly coveted," says Curtis Brown, a principal with Ross Brown Partners Inc., who brokered the deal on behalf of the buyer and the local seller, MainSpring Capital Group. "It fetched a high price--one that MainSpring was not willing to negotiate." He tells GlobeSt.com that MainSpring is involved in about 500,000 sf of new development and wanted to sell Sky Harbor Transit Center and redeploy the capital in new projects.
Located at 1250 E. Hadley St., the three-year-old, class A building is 100% leased to six tenants, including L.A. Specialty Produce, Gate Gourmet and Express Global Systems Inc. The building went into escrow just two weeks after it was listed, but then dropped out, Brown says. Dividend Capital stepped in and made a verbal full-price offer, resulting in MainSpring turning down another offer for more money because it had already committed to the REIT.
The building, sandwiched on 10 acres between Downtown and Sky Harbor International Airport, is one-of-a-kind, Brown says. "A high-quality multi-tenant industrial building in this submarket is hard to find," he says.
Sky Harbor Transit Center traded at an 8.4% cap rate. Dividend Capital paid cash for the building and "didn't quibble on the price," Brown says, adding the building is a long-term hold with stable cash flow.
Sky Harbor Transit Center is Dividend Capital's second acquisition in the Valley. Earlier this year, the REIT acquired 1.3 million sf of Valley industrial space from the San Francisco-based Rreef. Brown says the REIT "likes Phoenix because the barriers to entry are getting greater all the time."
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