Off-Market Deals Box 720,000 SF in Alliance

Transpacific Development Co. of Torrance, CA, bumping its North Texas portfolio to 1.65 million sf, has added a 400,000-sf distribution center at 4801 Westport Pkwy. and 320,000-sf one at 13501 Independence Pkwy. The adjacent properties, sold by affiliates of Magoon Estate Ltd. of Honolulu, are leased to Alpharetta, GA-based UPS Supply Chain Solutions Inc., with the larger one subleased to Schaumburg, IL-headquartered Motorola Inc. If local sources have it right, the leases have less than five years before they expire.

Sources also say the Alliance Gateway assets were marketed as a package two years ago. Due to the nature of the deal, the final prices aren't readily available, but the best-guess from those in the know is they brought more than the standard rate of $40 per sf for industrial sales. The six-year-old Westport building sits on 24.4 acres, with a Tarrant County assessment of $13.98 million. The Independence Parkway property, developed in 1999, takes in 18.3 acres, with a $10.9-million assessment. Atlanta-based IDI Inc. developed both structures.

Transpacific president Thomas Irish tells GlobeSt.com that he's been in talks for the duo off and on since they came off the market, but negotiations advanced to a more serious level in December 2006. He says the deals closed on an all-cash basis, but the plan is to float 10-year loans to cement the plan for a long-term hold.

Transpacific's goal is to amass five million sf to 10 million sf in Dallas/Fort Worth. In Indiana, Transpacific went from "zero to 3.5 million sf" in 11 months. It's the investment firm's second purchase in a Hillwood park in Texas, favoring their locations and "high-cube" distribution designs with minimum 28-foot clear heights.

"Our view is we want to buy a building that, if the tenant should leave us, we could find a replacement tenant within five miles of where we are," Irish says. With respect to the recently bought pair, he adds "we would hope our tenants will stay with us, but if not, Alliance is always going to be a high-demand park."

Irish and Transpacific founder Shurl Curci have sold nearly 10 million sf of office product that they developed in California. Irish says part of the proceeds will fund acquisitions in the Midwest and Texas. "I've been talking to every seller in the US that would sell me a distribution building," he says, adding the goal is to plant $250 million to $500 million this year.

Irish says Transpacific isn't banking on a surge in lease rates like some of his peers. In the Inland Empire, buyers are accepting 4.8% and 4.9% cap rates going into a deal. Texas specifically is "a place we want to be. It's not seeing the 5-caps that people are seeing in Southern California, Northern New Jersey and Chicago," he says. "We're not expecting to hit a home run every time, but we like nice steady income streams from our properties over a long, long time."