By Joe Clements
WESTWOOD—Dogged by the lingering recession cloaked over New England’s office landscape beginning in 2008, veteran CRE investor Mark H. Rubin was unable to spin his signature value-add redevelopment magic as planned in buying Southwest Park here nine years ago from Nordblom Co. But while the timing did not favor MARIC Inc.’s plan to create a mixed-use project on the prominent site perched at the juncture of Routes 1 and 128, a patient approach in stewardship and now an equally measured 18-month disposition process orchestrated by Boston Realty Advisors that concluded this week does appear to have paid off for Rubin’s Needham-based company.
This week’s $1.93 million sale of a nondescript 18,000-sf building at 21-25 Southwest Park (pictured) is the last of six such structures MARIC has harvested there since mid-2014 using a unique strategy crafted by BRA courting a select buying constituency—real estate users. “Given the lack of quality owner-user inventory within the 128 Central market, Southwest Park was a tremendous opportunity for owner occupants,” explains BRA Senior Partner Jeremy A. Freid, SIOR, and save ironically for the final property acquired this week by investor Scott Ravelson, the five others went to suitors seeking at least partial occupancy of their CRE conquests. Including the final trade, the campaign yielded $13.4 million for MARIC, or $131 per sf average to divest a 102,000-sf portfolio acquired nine years ago next month at a consideration of $104 per sf.
Focused on the Route 128 Central Market, the BRA team led by Freid had in prior assignments found similar buyers to be a lucrative source of prospects motivated by a combination of rising rents that make owning more favorable than leasing, greater confidence in the region’s economic future and record low interest rates which further eases risk. Size does matter—such buyers need the opposite of cavernous, capital-intensive facilities and instead seek limited acquisition and operational costs and enhanced identity, making the bite-sized Southwest Park buildings constructed between 1958 and 1983 ideal for such groups, Freid relays. Another prescient aspect in the case of Southwest Park helping the concept work for MARIC is that lease expirations were staggered such to enable a new owner immediate access as the terms expired over the prior 18 months.
“Everything has to come together, but when it does, the results can be significantly better,” Freid tells Real Reporter of concentrating on the user which he says generally can pay more than an investor save for core or net-leased assets. The BRA contingent that includes Adam T. Meixner, Jordan B. Sneider and Tyler Griffin processed all six sales, with New Dover Associates President Scott R. Hughes advising the very first buyer, that entity paying $2.2 million in June 2014 for 12-16 Southwest Park, a 14,700-sf building constructed in 1970 on a one-acre parcel. That equates to $149 per sf.
Sandwiched between the inaugural and final sales were four closings staggered from spring 2015 on, beginning in a pair of companion properties both encompassing 15,500 sf and each on an acre of land—20 and 22 Southwest Park—which delivered twin $2.07 million checks from their separate buyers within a week of each other after Memorial Day weekend. One week following Labor Day, 34 Southwest Park fetched $1.7 million, or a healthy $165 per sf, then came the late-December purchase of 33-35 Southwest Park, the largest in the mix at 27,650 sf that went for $3.34 million—or $121 per sf.
Freid praises BRA’s client for recognizing the strategy could result in a better outcome than a standard gillnet fishing approach scouring the globe for capital candidates, especially in opting to let the existing leases wane rather than competing for renewals. “It was a pretty risky approach to go that way, but it has borne out to be a real success story,” says the BRA principal. Suburban HVAC LLC was the buyer of 12-16 Southwest Park, whereas LYC Financial purchased 20 Southwest Park and Telamon Insurance took down 22-30 Southwest Park. Coretelligent was the winning bidder on 34 Southwest Park, while the biggest deal involved CGL Electronics and 33-35 Southwest Park. Rubin had owned the properties under the entity Westwood Cloverleaf LLC.
A slew of lenders assisted in funding the user deals, among them Bank of America, Boston Private Bank & Trust Co., Dedham Institution for Savings, First Commons Bank, New England Certified Development Corp. and Walpole Co-operative Bank. The final trade that came this week was an all-cash consideration.Tags: Adam Meixner, Jeremy Freid, Jordan Sneider, landlord representation