HOUSTON-Whitestone REIT has made its first acquisition outside Greater Houston, paying $8.3 million for the five-building Pima Norte in Carefree, AZ. The buyer, earmarking $2 million for tenant improvements and interiors, is planning to buy more in Arizona and elsewhere outside its homeport.
The REIT has bought Pima Norte at 36600 N. Pima Rd. from an office condo developer from Phoenix. “Right around the time they finished, the market died so they were willing to sell the buildings to us,” James Mastandrea, chairman and CEO of Whitestone REIT, tells GlobeSt.com. Whitestone's plan is to lease the estimated 50,000 sf rather than sell it.
Mastandrea says Pima Norte is slightly different from what's currently in Whitestone's portfolio because it's new. But, there is upside in the five-acre project. “The beauty of a portfolio like this is we can finish up the interior, lease it up and add value that way,” he says. The quoted rates are $25 per sf to $35 per sf, triple net.
Mastandrea adds that Whitestone's plan is to hold onto the complex for about five years after it's leased up. He project it will take 12 to 18 months to lease up the space. Whitestone will be handling leasing and management in house.
While Whitestone readies Pima Norte for the leasing market, it's also working on acquiring and planning other projects in several states. “We have a substantial pipeline and we're in varying stages from letters of intent to negotiating contracts to market analysis and due diligence,” Mastandrea says.
Mastandrea explains that management has no specific investment goal, but the idea is to diversify the risk of being in Houston. “The outside investments could grow to the size of our Houston portfolio,” he says. “Our interest is to be able to reach into new marketplaces that are within a short plane ride and to buy smaller, value-add properties within those markets.”
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