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Good Market, Lack of Clear Succession Plan, Led Rubenstein to $197M Portfolio Sale
With the passing of one partner, Rubenstein determined that since cap rates for sales are attractive, and warehouse and logistical center property is in demand, it was a good time to sell, says Mandelbaum Salsburg attorney Owen Hughes.
LITTLE FALLS, NJ—Strong demand for industrial properties nationally and the lack of a clear successor after the death of one of its principals led Rubenstein Properties of Little Falls, NJ to sell a national portfolio of 28 industrial properties to the Silverman Group of Basking Ridge, NJ for $183 million. The portfolio consisted of more than five million square feet of leasable space for industrial distribution and warehouse use, across New Jersey, Connecticut, Massachusetts, Iowa, Indiana and Alabama.
In addition to the portfolio sale, Rubenstein sold a property at 1055 Crossroads Boulevard in Muhlenberg Township, PA, to the tenant occupying the property for $14 million.
“Rubinstein Properties has been operating in the industrial property space probably for over 40 years,” Owen Hughes of Mandelbaum Salsburg, the Roseland, NJ law firm that worked on the portfolio disposition, tells GlobeSt.com exclusively. “The remaining principal, the general partner/manager is in his mid-70s. So, the company actually lacked a clear successor, and ownership considered that current market conditions presented an excellent opportunity. Cap rates for sales are attractive, and in particular, warehouse and logistical center property is in demand. So given all of those factors, they thought it was a an excellent opportunity to present the portfolio to the marketplace.”
Rubenstein is still evaluating whether it will reinvest the proceeds in other properties or simply wind down operations, Hughes says.
“Our properties were fully rented in prime real estate locations, which made it an attractive deal,” says Bill Rubenstein, managing member of Rubenstein Properties.
Among the properties in the portfolio are 10 Park Place, Butler, NJ; 20-21 Wagaraw Road, Fair Lawn, NJ; 39 Avenue C, Bayonne, NJ; 101 East Main Street, Little Falls, NJ; 114 Beach Street, Rockaway, NJ; 1578 Sussex Turnpike, Randolph, NJ (units two through five); 20, 50 and 80 Utopia Road, Manchester, CT; 118 Sanrico Drive, Manchester, CT; 135 Sheldon Road, Manchester, CT; 428 Hayden Station Road, Windsor, CT; and 1901Crossroads Boulevard, Muhlenberg Township, PA.
Mandelbaum Salsburg’s team included Hughes and senior member Barry Mandelbaum, with a team of attorneys and support personnel from the Real Estate practice. Gordon Duus of the firm’s Environmental Law Practice group assisted with securing environmental liability insurance policies that would protect both the seller and purchaser after closing.
“It was challenging in several respects,” says Hughes. “We had properties throughout the country, approximately 28 separate properties we had to address due diligence, titles, and surveys on all of those properties, and you’re in different jurisdictions with different standards and criteria regarding title insurance.”
Environmental issues typical of older industrial properties required the use of an LSRP in New Jersey to comply with the state’s SSRA laws, Hughes says.
“We’re finishing up some post-closing compliance issues for which we had a reserve set aside,” he says. “We have an environmental consulting firm cleaning up some of the paperwork in Connecticut to complete compliance with the Connecticut Transfer Act.”
A comprehensive marketing portfolio was prepared by CBRE Group on behalf of Rubenstein Properties. The CBRE team consisted of Brian Fiumara, Michael Hines, Brad Ruppel and Lauren Dawicki from CBRE Capital Markets’ Institutional Properties, Bill Waxman and his team from New Jersey along with Kyle Roberts (Connecticut), Morey Knutsen (Iowa), Tom Cooler (Indiana), John Reed (Massachusetts) and William Wolf (Pennsylvania).
“The properties are all strategically located within infill locations in order to take advantage of consistently improving industrial leasing fundamentals and increasing demand with extremely limited supply,” says Fiumara, executive vice president, CBRE. “Rubenstein Properties’ portfolio provided the buyer with an exceptional opportunity to grow rents by capitalizing on a renewed tenant focus on population-centric, interstate-accessible last-mile fulfillment assets.”
UPDATED, 2/26/2019, 2:49 p.m.: This article has been updated with two additional photos and a quote from Bill Rubenstein, managing member, Rubenstein Properties.