Thompson National Properties, through its Strategic Retail Trust and two other funds, is set to close on four office and retail acquisitions and an industrial sale totaling nearly $110 million.
The acquisitions include a portfolio of three Orange County, CA office buildings along with retail deals in Hawaii, Texas and Arizona-all markets where TNP is on the lookout for further acquisitions, along with Florida and Nevada. The industrial disposition is a single-tenant property in the Washington, DC area that is leased to a defense industry firm. The company is selling the property for $16.5 million on behalf of tenant-in common investors.
Tony Thompson, chairman and CEO of TNP, shares that the company is buying the Orange County office portfolio for roughly $55 million at a 9%-plus cap rate from a distressed seller via Thompson's participating notes program. The office portfolio is about 80% occupied and is cash-flowing at that occupancy, but it holds potential for higher occupancy despite the weak Orange County office market, according to Thompson. He explains that many of the tenants in the portfolio are government agencies, and one of the three buildings is especially well-suited to being upgraded to LEED standards.
"County, state and federal tenants are under mandates to be in LEED Silver or better buildings," Thompson explains. Many of those government tenants are in buildings that are not LEED certified, and "there are not a lot of landlords like us who have the capital or the expertise to bring these buildings to LEED standards," he says.
Regarding the retail deals, Thompson says his company is focused primarily on grocery-anchored retail centers right now. It is acquiring the Long's Drug Store-anchored Waianae Mall in Honolulu for $25.7 million through its TNP Strategic Retail Trust. And via its Delaware Statutory Trust 1031 Exchange program, TNP is buying a drugstore anchored retail center in Tucson for $8 million and a Ft.Worth retail center for $4 million. The Honolulu and Ft. Worth assets are set to dose at cap rates of more than 10%. Thompson points out that the company is also looking at other property types, including industrial space it is in negotiations on in Southern California and Las Vegas.
In addition to its acquisition activities, TNP has formed a new subsidiary, Commerce TNP LLC, that has acquired the asset services division of Commerce CRG of Nevada in Las Vegas. By doing so, TNP increases its assets under management by about three million square feet to a total of more than 17 million square feet. In the Las Vegas market, Thompson notes that the additional investment properties that it is gaining in its acquisition of Commerce CRG's asset services division are located primarily in Southern Nevada. He notes that the acquisition "increases the market coverage for both companies and allows us to deliver an expanded list of receivership, property management and advisory services to our growing clientele of financial institutions, accredited investors and mortgage servicers."
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