CreXus Pays $33M for Alliance Beverage Warehouse/Distribution Facility

PHOENIX-CreXus Investment Corp. acquired three buildings totaling 639,882 square-feet in one of the largest industrial sales in the region since 2008. The New York City REIT paid $33.25 million to Alliance Beverage Distributing Co., which is also the long-term tenant in two of the three buildings.

Don MacWilliam of Colliers International in Greater Phoenix tells GlobeSt.com that Alliance Beverage, which has occupied the asset as its warehouse/distribution facility in whole or part since 1998, also had the right of first offer when then-owner RJB Development was ready to sell. After that right was exercised, “Alliance asked me to go to market with it. It met the investment objectives of alliance to sell it to CreXus,” says MacWilliam, who, with Colliers’ Payson MacWilliam, negotiated the sales transaction and structured a modified lease between the tenant and new landlord. At the time of sale, Alliance Beverage had about 15 years remaining on its lease, and MacWilliam said more term was added, bringing the agreement to 17 years.  

Originally developed as separate buildings during the 1990s, 1115 N. 47th Ave. and 4411 W. Roosevelt St. are now completely connected as one facility with a combined total of 452,271 square feet that sits on approximately 23.36 acres. The remaining space in the third facility at 4405 W. Roosevelt St. totals 187,611 square feet and is 100% occupied by Updike Distribution Logistics.

MacWilliam goes on to say that, in shopping the asset around, he found a great deal of interest.  However, the cap rate necessary to make the deal work didn’t seem to be out there. “Investment dollars weren’t ready to pay those prices in Phoenix,” he says, adding that much of the stuff in the southwest valley submarket is trading in the mid $30-per-sf to mid $40-per-sf range.

But CreXus came forward with the $52-per-sf price for a couple of reasons; one of which that the founders of CreXus were once with W.P. Carey, and W.P. Carey was familiar with the region, having owned properties here. Furthermore, MacWilliam notes, the location at 43^rd Street and Interstate 10 is considered “Main and Main” for the southwest valley; a location that’s very difficult to replace or replicate.

Finally there was the tenant. Alliance Beverage has been in that location – and has expanded there – for more than a decade, and the company isn’t going anywhere anytime soon. “They looked at the years and the quality of the tenant,” MacWilliam said. “That helped them stretch to take on this deal.”