COLUMBUS, OH-Pacific Coast Capital Partners and Lehman Bros. have acquired the four-million-sf Spiegel Distribution Center here in partnership with Industrial Realty Group. Los Angeles-based PCCP and New York-based Lehman put up $5.4 million in equity to acquire the two-story warehouse out of bankruptcy for $21 million or $5.25 per sf. Merrill Lynch is the lender. Redondo Beach, CA-based IRG will operate the facility. Spiegel Distribution Center sits on 153 acres at the intersection of the I-70 and I-270 freeways, about five miles from Downtown Columbus. Originally constructed as Sears’ National Distribution Center in 1971, Spiegel purchased the facility from Sears in 1995 and occupied the majority of the building until declaring bankruptcy. The facility, which includes a one-million-sf second floor accessed via interior ramps and freight elevators, is currently 25% leased with Sears occupying 450,000 sf and Spiegel occupying 642,000 sf. PCCP principal Greg Galusha tells its low cost basis in the property will allow IRG to offer very low lease rates compared to other properties in the area. “I guarantee it will be below anything else in the market,” says Galusha, adding that the one-million-sf second floor will be “heavily discounted.”Typically a Western US investor, Galusha says they decided to invest in the project because IRG, its partner in several projects, has a good-sized industrial portfolio in the area. IRG’s niche is the purchase and redevelopment of old industrial properties owned by Fortune 500 companies or the government and no longer in use. It privately owns and operates over 50 million sf of industrial space, making it one of the largest public/private owners in the country.Spiegel Distribution Center marks the fourth transaction that PCCP has closed with IRG over the last 15 months. The first two properties acquired were a 775,000-sf Winn Dixie building and a 725,000-sf GM Parts building, both located on Forth Worth, TX. In March 2003, PCCP and IRG acquired the 78-acre Downey Commerce Center, a former NASA manufacturing facility in Downey. With regard to having bankrupt Spiegel as a tenant in its new investment, Galusha says if Spiegel were unable to pay rent, PCCP and Lehman would have to be paid like a creditor. “We’re hopeful that they will stay for the term of their lease; it helps offset operating expenses and we’ve got more than enough remaining space,” says Galusha. “If not, we would effectively stand in line as a creditor to collect those rent payments.”

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