This marks Guggenheim's first, but not its last acquisition in the Lehigh Valley, according to Peter Weisman, a principal of Net Lease Advisors LLC, a Guggenheim operating partner. He represented Guggenheim in the transaction and tells GlobeSt.com, "We're very impressed with the quality of the buildings, the location and the tenants. Absolutely, we're looking for more acquisitions here."
The sale included the assumption of existing above-market debt at a reported 7.3% cap rate, according to Gerald Moore, principal and managing director of financial services for the Garibaldi Group/Corfac International. He and Gerald Bower, vice president of Garibaldi's financial services arm based in Chatham, NJ, and Michael Bartolacci, senior vice president, who heads the company's Bethlehem office, represented the seller, locally based Arcadia West Associates, in the transaction.
Moore says the acquisition "represents continued and strengthening demand for core grade industrial real estate here. We're really bullish on this market and expect an increase in asset sales here." He declined to disclose the amount of debt the buyer assumed.
Had Arcadia paid off the note, it would have incurred a significant defeasance penalty, he explains, which was avoided by the buyer's assumption of debt. "Factoring what would have been the cost of defeasance, this sale is a strong indicator that investors do not discount the Lehigh Valley market in comparison to other, more established New Jersey industrial markets," says Bower.
The building is on 17.3 acres in the 250-acre Arcadia West Industrial Park. Bartolacci tells GlobeSt.com, "current rent rates for class A industrial properties here are between $4.35 per sf and $4.50 per sf, triple net. Rents are rising steadily. In 2006 they were up 6.5% over the prior year, and we expect a 5% to 6% increase in 2007."
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