Mount Laurel, NJ
The CBRE Investment Properties Team was engaged to handle the disposition of 1015 & 1025 Briggs Road, two adjacent 100% occupied, single-story suburban office buildings totaling 98,619 square feet in highly desirable Mount Laurel, NJ. The seller’s expectations were aggressive; wanting to achieve pricing commensurate with Class A multi-story suburban office and above comparable single-story office sales.
The team was confident that the impressive tenant roster of regional and national credit worthy tenants, extensive renovations in 1015 Briggs building, and an exceptional location with immediate access to regional highways would attract investors and allow them to deliver superior pricing. They commenced the marketing process in January 2019 by directly emailing to a database of over 7,000 qualified investors as well as broadly exposing the property to CBRE’s proprietary nationally populated database with more than 120,000 investors.
Within a month, the team received seven offers from buyers located in four states. Each buyer’s offer was initially discussed with the seller and then narrowed down to four buyers in a Best & Final which raised pricing by ±5% ($500,000). The CBRE team eventually achieved a top of the market result of $13,700,000, ($139/SF) and an 8.0% cap rate which far surpassed expectations. The transaction was closed in July 2019 with a highly qualified buyer who was already established in the Southern New Jersey market and had recently acquired multiple other properties throughout the region.
Kwik Goal Sale-Leaseback
CBRE’s Investment Properties Team represented Kwik Goal in the sale-leaseback of 140-160 Pacific Drive in Quakertown, PA. Kwik Goal, an innovative manufacturer and the leading supplier of soccer goals and field equipment in North America. The Property, consisting of three buildings on nearly eleven acres of land, serves as Kwik Goal’s corporate headquarters and main manufacturing and warehousing operations.
Challenges of the sale included Kwik Goal’s lack of credit rating due to its private status and a considerably high price per SF compared to recent market sales. Although these challenges had some impact on the buyer pool, the CBRE team focused on marketing the Property’s strengths, which included a heavily invested, industry-leading tenant who would be committing to a 15-year absolute NNN lease with contractual escalations, guaranteeing a long-term cash flow.
Through aggressive marketing with a national reach, the CBRE team identified 75 interested industrial investors and produced 12 initial, highly competitive offers from net-lease REITs, industrial equity funds and private investment groups. The CBRE team collaborated closely with Ownership to reach agreement on the best sale-leaseback structure and to achieve the desired pricing. The sale was finally awarded to Royal Oak Realty Trust, a private, non-traded REIT focused on mission-critical, long term net leased commercial real estate, who acquired the property in June 2019.
CBRE’s Investment Properties Team represented PowerSchool Group, in the sale-leaseback of 3 West Broad Street in historic Bethlehem, PA. PowerSchool is a leading education technology platform for K-12 classrooms. 3 West Broad represents one of four corporate facilities for PowerSchool.
Originally developed as an indoor shopping mall in the 1970s, the Property had been converted to a two-story office building and leased space to a diverse mix of tenants including the IRS and Intelliquip. The challenge was to identify a buyer that not only valued the in-place cash flow but would have the vision and capital to transform the dated building to a modern environment.
Utilizing the team’s extensive network of local and national investor relationships, CBRE took the asset to market, reaching over 7,000 investors, identifying over 46 interested parties and producing several competitive offers mainly from developers, equity funds and private investment groups based in the Mid-Atlantic and the Northeast.
The Property was ultimately acquired by Larken Associates, a second generation, family-owned business since 1965, and widely recognized as one of the fastest growing and most well-respected real estate developers, builders and property managers.
The Property is now 100% occupied, with PowerSchool occupying and leasing back 72% of the building. The new Ownership has planned significant exterior and interior renovations to modernize the building.
Hudson Companies Government-Leased Portfolio
Various PA Locations
In early 2018, Hudson Companies tasked the Investment Properties team with the selling of a 5-property government-leased portfolio, totaling 141,000 SF. The Portfolio included the PA Dept of Corrections headquarters, three new build-to-suit PA State Police buildings and build-to-suit PA Department of Human Services building in various PA Locations. Hudson Companies was also seeking to sell two build-to-suit Commonwealth of PA state police barracks totaling 35,000 SF in Chambersburg and Indiana, PA that were still under construction.
Due to the confidential nature of government tenants, the team was faced with the challenge of discreetly identifying a government property focused buyer that had the resources to systematically acquire a highly diverse portfolio of properties. Although the Commonwealth of PA is A-rated and had committed to 15-year leases, we needed to demonstrate the ability to manage a geographically and size diverse portfolio in an efficient manner, similar to current ownership, without an impact on a buyer’s yield.
The team confidentially presented the opportunity to an A-list of highly qualified investors and ultimately selected Boyd Watterson, a privately-owned asset management company with a primary focus on government leased real estate, as the buyer. Over a period of time, the CBRE team successfully and efficiently coordinated Boyd Watterson’s phased acquisition of the Portfolio at full market value.
3 & 4 Creek Parkway
The Philadelphia Investment Properties team was tapped by RedGo Development to arrange the sale of 3 & 4 Creek Parkway located within Naaman’s Creek Center in Boothwyn, Pennsylvania. The Offering consisted of a two-story office building and a single-story industrial facility, totaling 50,028 square-feet situated on 8.67 acres, as well as an adjacent 3.22-acre parcel available for additional development. Both buildings were 100 percent occupied on a long-term basis and self-managed by Pentec Health, Inc., a company that provides patient-specific medicines and therapies for dialysis patients and targeted drug delivery for patient’s with intrathecal pumps.
The challenge was to identify an investor who would provide full stabilized market value for a single tenant property consisting of three different components of office, flex and land. The other challenge was being able to successfully execute a market-leading disposition in an office park that most recently had a portfolio sale at a much lower price per SF.
The CBRE marketing team positioned the asset as a guaranteed stable cash flow from an established and well-regarded tenant with a secure net lease structure, along with highlighting the easily accessible location with nearby amenities and strong demographics.
After identifying over 40 potential buyers and a dozen offers from highly-qualified buyers, the sale was eventually awarded to SSH Real Estate, a private firm that already owned a significant amount of real estate within Naaman’s Creek Center. They acquired the Property in July 2018 for a sale price of $8.9 million ($178/SF).
The Malvern School Portfolio
13 PA and NJ locations
In June 2018, The Philadelphia Investment Properties team was awarded the assignment of a 13-property sale leaseback for The Malvern School. The Malvern School is a year-round private preschool with 27 locations throughout affluent suburbs of Southeastern Pennsylvania and Central and Southern New Jersey.
The sale-leaseback structure that Ownership was pursuing posed several challenges. First, a single purpose entity lease guarantee that The Malvern School was seeking, versus a corporate guarantee (which most day care tenants offer) would detract a large portion of the buyer pool. The new owner would also be required to maintain responsibility for the roof and structure, deterring the passive buyer pool. Other potential issues included limited visibility as most of the school locations were on secondary roads, which could limit future uses of the sites. The nature of the day care business in relation to the economy also posed a challenge considering day care is one of the first major expenses to be cut when someone loses a job or income. Seeing as schools are designated “special purpose”, the limited backfill and redevelopment options added to the risk profile.
To overcome these challenges, a comprehensive marketing package and campaign strategy was implemented in order to target potential buyers. By highlighting the advantages to a sale-leaseback structure with a NN lease while focusing on the superior performance of the business and excellent demographics of surrounding areas, the team was able to procure a number of interested investors.
After receiving multiple competitive initial offers, the sale was ultimately awarded to Essential Properties Realty Trust, a publicly traded single-tenant net lease investment firm with a focus on service-providing real estate acquisitions. With careful negotiations, the team oversaw a successful transition to new ownership, including the execution of a new 15-year net lease by The Malvern School.