Suburban Cincinnati Office Project Fetches $20M

FLORENCE, KY-The 219,000-sf Turfway Ridge Office Park here has changed hands for $20 million. New York investors Ivan Wolpert and Matt Sharp acquired the two-building class A office complex from an entity of Credit Suisse First Boston. The two office buildings, which were built in the late 1980s, are 75% occupied by about 30 national and regional tenants. Sharp tells GlobeSt.com the going-in capitalization rate on the investment is 8.5%, which he expects to raise by pushing occupancy to 90% within 18 months. In addition, he plans to negotiate some early lease extensions with existing tenants to stagger some lease rollovers that are currently bunched up in year three. “This submarket is funny,” Sharp says. “There’s only four or five class A buildings and we are probably one of the best ones; it’s got quality and location and the engineers report came back with absolutely no deferred maintenance.”Despite that, Sharp and Walpert have set aside $1.25 million to cover lobby upgrades and leasing expenses. After a refurbishing and redecorating of much of the common area, the owners intend to re-introduce the property to the leasing brokerage community and aggressively market the available space. “There has been a perception in the market that the buildings were not positioned to aggressively pursue new transactions,” says Scott Yards of CB Richard Ellis, who with John Eckert has the leasing assignment for the property. He adds that new ownership has given him the mandate as well as wide latitude to be creative and competitive in pursuing new tenants for the property. The going rate in the submarket is $17.50 per sf per year.Walpert is a third generation New York real estate investor with apartments throughout New York City and some elsewhere in the state, Sharp says. Sharp owns Milton Point Investments, an entity he formed to invest in office and multifamily properties in the Midwest on behalf of high-net-worth individuals, families and trusts. Turfway Ridge Office Park was acquired by a joint venture of Walpert’s Belle Harbour Capital and Sharp’s Milton Point Investments. Sharp the joint venture has $25 million of equity earmarked for acquiring $100 million of real estate in the greater Cincinnati area. “The economic and demographic growth and the diversity of industry in Northern Kentucky continue to be extraordinary,” Sharp says. “Additionally, we are blissfully under the radar of most national investors”. “The major population centers on the East Coast are overheated making it difficult to generate solid return or value added opportunities,” Walpert adds. “Properties in certain growing Midwest submarkets, such as Northern Kentucky, offer better growth stories and much better returns.”