503,239 SF Yields $34M on Second Sales Run

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PHOENIX-SunCor Development Co. and Ryan Cos. have sold the 503,239-sf Riverside Distribution Center for $33.7 million. Pension fund investor McMorgan & Co., which had shown interest in the center the first time it hit the market, came away with the prize.

“We’d had an agreement with another buyer to sell this some months ago, but a major tenant went bankrupt before moving in,” says Joe Porter, senior vice president for CB Richard Ellis in Phoenix. “We took the building off the market for a couple of months until we could stabilize it, then filled the space with Kroger, which became our lead tenant.”

Porter tells GlobeSt.com that he and colleagues Pat Feeney and Dan Calihan put the leased-up property before nearly 30 investors who were involved in the first bidding round. The San Francisco-based McMorgan offered the highest price, according to Porter.

It will be 2007 before the first lease expires. Others stretch out until 2014. Besides Kroger, the roster includes Smith’s Food and Drug, Humana Pharmacy and Ward North American Van Lines. “Basically, around 40% of the building has about seven years left of rent,” Porter says.

Riverside Distribution Center had been a CB Richard Ellis project from the start, with the real estate company arranging the first-time joint venture between the Tempe-based SunCor and Minneapolis’ Ryan Cos. and then designing, leasing and selling it. Porter says Ryan would like nothing better than to partner with SunCor in the future, but both companies are pursuing separate deals. “They had a successful relationship with great enthusiasm,” he adds. “They were great to work with.”