Ireland has purchased the two-year-old, 22,000-sf, 100% leased regional headquarters building of the St. Johns River Water Management District for $3.71 million or $144 per sf, one of the highest per-sf prices ever paid for a small office structure in Central Florida, according to GlobeSt.com research.

The two-acre property adjoins the 14-acre, 102,239-sf, 100%-leased Sprint PCS Regional Communications Center that Ireland bought last year from Maitland Springs Inc. and Mike Fess of Orlando-based Equity Partners Inc. for $18.55 million or $180.77 per sf, the highest per-sf price paid for an office product in metro Orlando, according to GlobeSt.com research.

The water management agency's building is at 975 Keller Road in Maitland, FL. The Sprint building is at 965 Keller Road. Fess and Maitland, FL-based University Science Center Inc., headed by Cabot L. Jaffee, sold the water management building to Ireland.

The state agency occupies 17,800 sf in the 22,000-sf building at a base rate of $12.78 per sf with annual rent increases of 3.5%. The estimated aggregate value of the 10-year lease is $2.31 million.

Lehman Brothers of New York financed the acquisition. Ireland is using funds from the $54 million sale of his 13-story Los Angeles Mart in 2001 to acquire properties in Texas and Florida. He looks for sites that house one or two investment-grade tenants signed to long-term leases in undervalued markets such as Dallas and Orlando, Ted Gibbons, president of 24-year-old Investment Realty Advisors Inc. of Bellevue, WA and Boca Raton, FL, tells GlobeSt.com. Gibbons represented Ireland in both deals. Fess negotiated for the seller.

"Mr. Ireland was able to tie the property up one year ago and close yesterday (Oct. 29) at a price that is at least $600,000 under its fair market value in today's strong market for investment grade real estate," Gibbons tells GlobeSt.com.

The California tycoon bought the property because "it was difficult even then to find any property for sale with an agency of the state of Florida on a 10-year lease in a new building in a good market," Gibbons says.

"Today, it is almost impossible, and any such deals would be selling under an 8% capitalization rate," the broker says. "There were back-up offers on the property at a significantly higher price.

Gibbons calls the $12.78 base rent low but says the water management agency has had a single-A rating from Standard & Poor's Corp. on previous debt offerings, "making it a high-quality investment grade credit lease." He says the agency may lease the remaining unfinished 4,200 sf later for computer in information technology operations. The agency's lease began Oct. 1, 2001.

Gibbons tells GlobeSt.com his client is not overly concerned with the existing low base rent. "The key with WMD is that once they are your tenant, you have a relationship that can develop into other deals with the state of Florida," Gibbons says.

"Jud (Ireland) is very oriented toward tenant relations," the broker says. "He works with his tenants so he can retain them long term. He considers himself not just a landlord but more of a concierge, like in a hotel where he coddles and pampers them."

Gibbons says his firm specializes in the sale of single-tenant, investment grade properties and assists real estate developers and high net-worth individuals with IRC Section 1031 tax deferred exchanges by finding high-quality replacement assets.

Instant Insights /

GlobeSt.com EXCLUSIVE: Beverly Hills Tycoon Closes on Second Phase of $22M Deal

Related Stories

Recommended For You