The seller bought the building five years ago for about $26 million when Cargill was about halfway through its 10 year lease, says Larry Welsh, VP with Falcon. "We just negotiated a five-year renewal by Cargill, then took it to market and sold it," Welsh tells GlobeSt.com. "Our mortgage was coming due, so we paid off the mortgage. It's easier to sell these days than refinance. We may 1031 the equity, or this may be the best time to get the money out."
He says the company was lucky to have put the property out before the credit crisis hit. "We were already in due diligence when this happened, there's just not much happening now," Welsh says. "We're finding that on all the deals to buy, you can't get quotes. Some people are quoting on loan-to-value, but won't quote on rate. Nobody knows how to price now." The sale basically ends Falcon's property ownership in Minnesota, Welsh says.
Fortunately, Cargill is a respected tenant in the market, he says. "The likelihood of them staying past their lease is far greater than some of the other assets in the market," Welsh says. "That gives a buyer some confidence."
The property was built in 1998 within the Minnetonka Corporate Center Business Park, and includes a parking garage. Lease rates weren't disclosed. Average rates for the area run about $27.36, according to a Grubb & Ellis third quarter market report.
Steven Buss, Tom Holtz and Ryan Watts with CB Richard Ellis' Minneapolis Institutional Group represented Falcon in the transaction. Hart Realty Advisors handled the buyer.
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