(Read more on the industrial market.)
CANTON, MA-The APCA Property Fund I will purchase 110 Shawmut Rd., a 70,000-sf flex/industrial building here for $6.7 million. The fund was created by Paradigm Properties and the Ashforth Co. to be divested at the institutional level once $150 million in product is acquired and positioned to attract such capital.
"That's the concept," APCA principal Steve Allison tells GlobeSt.com, explaining that the process has gone so well that the group is now creating a second fund that will take a similar path. The equity raised is to be nearly three times the $52 million assembled for Fund I, says Allison, who adds that the Boston-based investor is now halfway to buying the properties needed to close out that initial vehicle, one that has $150 million in buying power. Other recent purchases for Fund I include 196 Mechanic St. in Bellingham and 176 South Washington St. in Norton, both industrial properties, while the firm has another warehouse north of Boston under agreement.
Having bought 263 Summer St. in Boston and a 114,000-sf office building in Merrimac, NH, Fund I is not exclusively dedicated to industrial, but Allison says the group considers the product type attractive to institutional sources. "They are often underweighted in that asset class," says Allison. Limited supply and fierce competition for major industrial properties are reasons, and deals such as 110 Shawmut Rd. are simply not large enough for pension funds and other super-sized money to process efficiently, Allison explains. The value of Fund I is having a ground-level team able to ferret out small- to mid-sized opportunities that can be packaged on a large enough scale, he says.
"It's not a new idea, but one we think we can do well with," says Allison. The local knowledge helps uncover hidden gems such as 110 Shawmut Rd., and in that instance, he says the upside was deemed even better due to a new ramp planned for Interstate 95 benefiting the property. The real estate team is addressing issues at other buildings, either boosting occupancy or making capital investments to give them a passing grade for institutional capital.
While the 210,000-sf Bellingham distribution center is a modern facility requiring little attention, 176 South Washington St. will require about $1 million to convert it to a multi-tenanted distribution center, Allison estimates. The firm paid $12.5 million for 176 South Washington St. last month, a deal negotiated by Cushman & Wakefield.
The 110 Shawmut Rd. property appeals to users needing 10,000 sf to 20,000 sf of flex/industrial space, says Allison, whose team will try to increase occupancy. "It fits a nice niche, and has a really strong location," he says, and is in good shape physically. CBRE/New England principal Gary Lemire and colleague Patrick Cavanagh negotiated the sale of 110 Shawmut Rd., a deal expected to close this week. Allison would not discuss terms of the sale, but sources place the price at $6.7 million.
The portfolio sale of Fund I to an investor will probably take a few years, Allison says, adding the group does not feel pressured to rush the process to play into the hyperactive investment climate. "We think that even when the froth leaves the capital markets, this will be a good strategy," he says. Fund I is chasing deals in New England and down the eastern seaboard, with a particular focus on the Philadelphia and New Jersey markets. "We like Philadelphia a lot," he says. "It is relatively healthy, like Boston, but is also a much bigger market and there are more opportunities." The second fund will also focus on that same geographic footprint, he says.
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