Meritex Divests Office, Warehouses for $57M

ROSEVILLE, MN-Meritex Enterprises has sold three properties, including two warehouses and an office building, in an effort to rid itself of large, single-tenant facilities. The properties, which include a 147,000-sf warehouse in Columbus, OH; a 646,000-sf warehouse in Memphis; and a 250,695-sf office building in St. Paul, sold for a total of about $57 million.

Daniel Williams, chief investment officer for Meritex, says the move is about what properties the company thinks will generate the best return. “We want to invest in smaller, multi-tenant industrial facilities in select markets,” he tells GlobeSt.com. “We feel that we’ll end up with a better risk-adjusted return as opposed to single-tenant bulk warehouses and office buildings.”

The property at 1585 Westbelt Dr. in Columbus was sold to Columbus VP Partners Ltd. for $5 million. The bulk distribution warehouse was built in 1979, and is 100% leased to Victory Packaging. The other industrial property, at 4836 Hickory Hill Rd. in Memphis, sold for $16.1 million to Crown Memphis LLC. The 20-year-old building, also a bulk warehouse, is leased by Meritex’s logistics subsidiary for a five-year term.

The office building at 444 Lafayette Rd. in St. Paul went for $36 million to 444 Lafayette LLC. The property was originally built in 1919 as a warehouse, but was converted to be an office building in the 1970s. Meritex recently completed a major remodeling of the property to ensure the 10-year lease renewal with the Minnesota Department of Human Services. Though it sold the property, Meritex will continue to provide property management services for the new owner. “The office obviously has tenant improvement capital needs that are much greater than the light industrial buildings that we hope to own instead,” Williams says.

The company is continuing its repositioning program from a strategy launched in 2003, Williams says. Since then, the firm has disposed of more than 4.2 million sf of office and bulk warehouse space and has repositioned its funds into more than 4.6 million sf of multi-tenant industrial properties in Columbus, Indianapolis, Atlanta, Houston and Minneapolis. “These are really the cities that we want to target,” Williams says. The firm owns, leases and manages about 8.5 million sf of commercial real estate in nine markets, including the above and Denver, Kansas City, Nashville and Warren, OH.