BlackRock now owns the 190,702-sf Gainey Ranch Financial Center at 7377 E Doubletree Ranch Rd. The Lowe/GE joint venture retains ownership and in the 269,091 SF Paradise Valley Office Park at 11811 N. Tatum Blvd. in Phoenix and the 251,588 SF Scottsdale Executive Office Park at 7975 N. Hayden Rd. and 8655 E. Via de Ventura in Scottsdale. The group is planning $1.4 million in upgrades.
"One of the three assets was a core property that fit another investor's criteria better than ours," explains Kent Merselis, senior vice president of Lowe Group's Arizona office. "They'd been a competing bidder and had introduced themselves to us as a potential buyer, should we be successful in the bidding process." With the JV's success in the acquisition, "BlackRock was willing to step up and pay us a premium," Merselis says, declining to elaborate on what BlackRock paid for the facility.
But he does tell GlobeSt.com that the transaction is only the tip of the iceberg for future investments. "We're looking at more deals every day," he says. "We're trying to increase our portfolio in value-add properties."
With an average occupancy of 82% and an age of 20-plus years, the portfolio provides a perfect investment vehicle for the partnership. "We're looking for quality properties that are experiencing below-market occupancy levels or properties that, for whatever their reason, are in need of capital expenditure," Merselis tells GlobeSt.com. "We can then put a marketing focus team in there to lease them up."
"Though this wasn't our initial transaction with GE, it was significant," Merselis adds. "It cemented the relationship and encouraged both sides to increase our portfolio."
He adds that Lowe will handle leasing and property management for the facilities. Timi Anyon Hallem of the law firm of Manatt, Phelps & Phillips LLP's Los Angeles office did the legal work for the JV. In the original sale to the JV, Dennis Desmond of Trammel Crow Co.'s Phoenix office brokered the deal for Gainey Ranch Financial LP.
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