Boulders Buys L-3's 90,432-SF Local Hub

The 1908 110th St. property was developed for Hughes Electronics Corp., which turned over the real estate in a lock, stock and barrel buy about 15 years ago by New York City-based L-3 Communications. About four years later, the foundation, acting as CS Grand Prairie, bought the property for its portfolio, says Ted Gibbons, president of Investment Realty Advisors Inc. in Bellevue, WA.

The seller, looking to reinvest closer to its homeport, put the Grand Prairie asset and five others on the market. In its Texas exit, the foundation recently collected $19 million for a 208,593-sf structure at 1701 Valley View Lane in Farmers Branch leased to Cingular Wireless LLC through June 30, 2007.

Gibbons says L-3's hub was on the market 60 days, with 25 inquiries and six solid offers rolling in for a deal with a 10.63% cap rate this year and 12% in 2007. The Chicago-based Boulders "wasn't the highest bidder, but they had the most credibility in terms of their ability to perform," Gibbons tells GlobeSt.com. "And, they did indeed perform. The high yield was the reason for all the attention."

Gibbons says the L-3 lease carries an annual cancellation right due to its government contracts. But, he adds "it looks like they'll be in this facility for a long time."

To make the close, the broker says Boulders assumed a $2.32-million loan with 4.5 years left on the term with a conduit lender. "The cash-on-cash return for a major tenant in a major metro was the trade-off, with a lease for a higher yield," Gibbons says.