NEW YORK CITY—HPI Capital Inc., the managing entity for the HPI Group, is marketing a portfolio of 10 properties that are leased to the US General Services Administration. One of the largest owners of GSA-leased properties in the country, the HPI Group is selling a 987,968-square-foot portfolio that includes a mix of properties in eight states and is occupied by more than 10 federal departments and agencies.
Newmark Grubb Knight Frank has been tapped to represent HPI. The real estate services firm's capital markets team on the deal is led by Kenneth Zakin in New York, Tim Strange in Oklahoma City and Mark Phillips in Phoenix, and is supported by additional Newmark Grubb Knight Frank brokers in their respective local markets.
"This is an exceptional opportunity for an investor focused on acquiring government-leased properties to obtain a large, diversified national portfolio of high-quality properties in a single transaction," says Zakin. "In addition, the existing interest-only financing will enable an investor to receive significant cash flow over the next three years, as well as have an opportunity to favorably refinance the portfolio in 2017."
The properties are located in Albuquerque, NM; Durango, CO; Fresno and San Bernadino, CA; Houston; Kansas City, MO.; Page, AZ.; Philadelphia; and Pocatello, ID. The Federal branches, departments and agencies that occupy the properties include the Social Security Administration, Citizenship and Immigration Services, Immigration and Customs Enforcement, Federal Courts, Internal Revenue Service, Treasury Department, Agriculture Department, Army Corps of Engineers, Forest Service and National Park Service. Most of the properties are mission-critical facilities and offer a mix of office, processing centers, court houses and regional headquarters ranging from the 23,616-square-foot Federal Building in Durango to the 327,865-square-foot USDA regional headquarters in Kansas City.
HPI acquired the properties from 1997 to 2004 and arranged $125 million of securitized financing for the portfolio in 2007.
“The nature of the facilities that comprise the portfolio, and the ongoing demonstrated commitment to these properties, should provide investors with significant comfort that the acquisition will provide a long-term, uninterrupted, U.S.-government-backed income stream,” says Strange.
Adds Phillips, “The government has made significant investments in several properties, including new construction and substantial renovations, to accommodate the needs of the respective tenant agencies. The GSA's ongoing 'Freeze the Footprint' real estate program further enhances the likelihood of lease renewal at the properties.”
The properties are being offered as a portfolio only and are without an asking price. The marketing program is expected to launch by mid-October with a bid date to be announced after marketing begins.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
