CHANDLER, AZ-Making its first area investment, Griffin Capital Corp.'s Griffin Capital Essential Asset REIT Inc. paid $32.5 million for ownership rights of a single-tenant, 231,400-square-foot, class A, flex R&D facility. The build-to-suit asset, sold by a group of 21 TIC investors arranged through FORT Properties, has been leased to Avnet since its completion in 2008.
Avnet, an electronic components distribution company, uses the facility at 6700 W. Morelos Place for R&D and assembly for its technology solutions business segment. The asset was built by Ryan Cos. Inc. of Minneapolis and acquired by FORT Properties for $35.2 million in July 2008. As for Griffin's REIT, the property made sense from a cash flow perspective. "The bottom line is that it's leased to a solid, credit-worthy tenant in a prominent submarket in a region that's on the mend and on the rise," comments Griffin Capital's chief investment officer Michael Escalante.
He tells GlobeSt.com that the asset was marketed by Cushman & Wakefield of Arizona Inc. In fact, Cushman & Wakefield's Chris Toci, which led the brokerage team representing the seller, was also involved with the building's sale to FORT close to five years ago.
According to a press release from the El Segundo, CA-based Griffin Capital, the TIC group selling the property had structured its ownership as a five-year hold with a matching five-year first-mortgage loan. The REIT's acquisition retired that debt, enabling a majority of the investors to pursue a tax-deferred §721 exchange for limited partnership units in the REIT's operating partnership. Other investors were free to cash out or pursue other options.
Commenting on the acquisition in the press release, Louis Sohn, Griffin Capital's senior vice president of acquisitions says: “Our reputation and experience investing alongside TIC investors, and doing so in partnership with independent financial advisors and their broker dealers, afforded us the opportunity to present the merits of a §721 exchange directly to the investor group. At the end of the day, the TIC investors will diversify their investment across 19 assets and receive a competitive current distribution rate on their adjusted equity.”
Escalante says the REIT is looking for more assets to buy in Phoenix. "The REIT is geared toward business-essential assets that handle operations integral to an organization," he says. Phoenix makes sense because it's starting to create jobs, a trend Escalante believes will continue into the future.
"We also believe that the real estate stock there is generally newer and the environment is conducive to business," Escalante adds.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
