Paul Nasser, chief financial officer and chief operating officer with Intercontinental Real Estate Corp. says the assets add a nice ingredient to the fund's portfolio. "The US REIF is trying to get diversification through geography and property type," he explains. "This buy was an opportunity for us to get diversification, both geographically and with the property type."
He tells GlobeSt.com that the fund, which currently has $1.1 billion of assets under management, is focused on acquiring core-plus and value-add deals. Eighty percent of the capital raised is focused on income-generating property, while the remainder is dedicated toward value-add opportunities.
The Tucson industrial portfolio, which has an 89% occupancy, falls into the former category of core-plus assets. "The initial attraction of this was an income stream from the tenants in place, paying rent," Nasser comments. "Then, when the rents and leases mature, there's an opportunity to move those leases to market." With the majority of the rents set some time ago, the leases have some upside to them, assuming a stable market, Nasser adds.
The asset hold will be long-term, based on the fund's requirements. "We could conceivably own these forever, but they're underwritten to a 10-year-old," Nasser says. "The idea of this fund is for cash flow and moderate appreciation over the period." Though Muller Co. had managed its buildings, the Laguna Hills, CA company will not have that assignment under the new ownership.
The portfolio consists of Tucson Center I at 2929 E. Corona Rd.; Tucson Center II at 6950 S. Country Club Dr.; Tucson Center III at 2900 E. Elvira Rd. and Tucson Center IV at 3000 E. Elvira Rd. Also in the collection are Medina Business Park I & II at 2201 E. Medina Rd. and 2425 E. Medina Rd. The total land size is 55 acres.
The more than 30-year-old portfolio underwent renovations in 2007. Tenants include Ferguson Enterprises Inc., United Collection Bureau Inc., United Parcel Service Inc. and Solon America.
Grubb & Ellis Co. senior vice president Ryan Gallagher and vice president Kelly Rohfield from the Newport Beach, CA office had the marketing assignment. They were assisted by Stephen Cohen and Russ Hall, principals with PICOR Commercial Real Estate Services in Tucson. Intercontinental Real Estate had in-house representation.
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