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6/05/13
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Griffin Capital Corporation closed on the purchase of a 231.4k sf, Class A, flex R&D facility located in Chandler, AZ for $32.5 mil, which works out to about $140/sf. The property, acquired on behalf of Griffin Capital Essential Asset REIT Inc, is fully leased to Avnet Inc, which has occupied the building since its construction as a build-to-suit for the tenant in 2008.
Avnet operates the facility as its domestic Assembly Facility. Avnet, founded in 1921, is Arizona's largest-publicly held business with headquarters in Arizona, and one of the world's oldest and largest distributors of electronic components and customized technology solutions. The company is ranked #117 on the Fortune 500 List for 2013.
Ideally situated in Chandler, aptly referred to as the "High-Tech Oasis in the Silicon Desert", this location allows Avnet to maintain operations within proximity to its other domestic operating centers, including the company's corporate headquarters in Phoenix and numerous other essential operating locations situated throughout the Greater Phoenix Area.
The REIT acquired the asset from a group of 21 tenant-in-common investors who purchased the property shortly after Avnet took occupancy in 2008. The TIC group's investment was structured as a five-year hold, with a matching five-year first mortgage loan; the REIT's acquisition retired that debt, and enabled a majority of the investors to pursue a tax-deferred Section721 exchange for limited partnership units in the REIT's operating partnership--other investors were free to cash out or pursue other options. The seller was represented by Team Toci of Cushman & Wakefield of Arizona.
Commenting on the acquisition, Louis Sohn, Griffin Capital's Senior Vice President of Acquisitions said, "Our reputation and experience investing alongside TIC investors, and doing so in partnership with independent financial advisors and their broker dealers, afforded us the opportunity to present the merits of a Section721 exchange directly to the investor group. At the end of the day, the TIC investors will diversify their investment across 19 assets and receive a competitive current distribution rate on their adjusted equity."
Michael Escalante, Griffin Capital's Chief Investment Officer added, "This acquisition fulfills a number of key objectives for the REIT including: a highly accretive investment yield relative to the REIT's current distribution rate; our first acquisition in the Phoenix market; and the ability to acquire a large, institutional-quality asset while still preserving cash for future acquisitions. This transaction provides a classic 'win-win' scenario for all parties involved and demonstrates the competitive advantage inherent in our REIT's structure, whereby we can provide tax-efficient disposition options to owners of real property."
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