Prolific industrial portfolio buyer Capital Partners has picked up some of the newest space in the Twin Cities with a five-building deal approaching $60 million.
Minneapolis-based Capital Partners and Los Angeles-based Pacific Coast Capital Partners paid $59.95 million for the buildings, according to a press release from the Twin Cities office of Colliers International. The portfolio is the fourth priced at over $50 million that Capital Partners has purchased since the start of 2018.
The seller in the transaction was Indianapolis-based Scannell Properties. Scannell has sold other properties in the Twin Cities in the past year, including two brand-new Twin Cities warehouse properties sold last September to a Hawaiian investment company for $37 million in cash.
The five buildings in Scannell’s sale to Capital Partners and PCCP are in Newport, Brooklyn Park, Bloomington, Maple Grove and Shakopee and total 557,887 square feet of space. The overall deal, which closed on Feb. 19, works out to $107.46 per square foot of space. About 90% of the space in the properties is leased to nine total tenants.
Only one certificate of real estate for the properties had been made public as of Tuesday. That $14 million component of the portfolio deal was for the Raceway Business Center II at 910 Hastings Ave. in Newport. Scannell completed the 143,640-square-foot warehouse last year. The anchor Tenant, ACS Fabrication, leases about 72,000 square feet, according to Capital Partners. Washington County values the property at $3.2 million for tax purposes.
The other buildings in the portfolio deal are:
- The 75,000-square-foot Northland IV building at 9200 75th Ave. N. in Brooklyn Park. Military equipment seller NorcaTech is the anchor tenant with about 60,000 square feet of space in the recently completed building.
- The 99,247-square-foot GAF Building at 8175 Jefferson Highway N. in Maple Grove. GAF Metals leases the entire building, which was built in 1974 and remodeled last year.
- The 115,200-square-foot Nesbitt Distribution Center at 6150 110th St. W. in Bloomington. MTS Systems Corp. is the anchor tenant in the building with 86,400 square feet of space in the 25-year-old building.
- The 124,800-square-foot Valley View Business Park, Building 4, at 20650 4th Ave E. in Shakopee. Batory Foods is the anchor tenant in the building, which was completed last year.
The portfolio sale moved quickly because Capital Partners and PCCP were “aggressive” in the deal, said Dave Berglund, a Twin Cities-based senior vice president on the Colliers International brokerage team that represented Scannell.
Colliers notified PCCP that the Scannell properties were going on the market. Before they did, PCCP and Capital Partners made a winning bid, Berglund said in a Monday interview.
“They made a very compelling offer,” he said.
The purchase increases Capital Partners’ Twin Cities portfolio to 8 million square feet of space, which is the largest set of local industrial holdings by any investor, said Capital Partners founding partner Peter Mork. The age and condition of the buildings in the portfolio, as well as the occupancy rate, were attractive to his company and PCCP, he said in a Tuesday interview.
“Three of the five buildings are new construction, developed by Scannell, which knows how to develop industrial real estate,” he said. “This is the product type that institutional investors are trying to buy across the country.”
Capital Partners expects to lease about 50,000 square feet of vacant space in the portfolio in the next six to eight months, Mork said. The average weighted lease length among the tenants leasing space in the properties is 7.5 years, Berglund said.
Mark Kolsrud, Colin Ryan, Pia Robertson, Pete Carbonneau and Sarah Gutknecht with Colliers also represented Scannell.
Capital Partners has purchased several large industrial portfolios over the past two years. In the largest deal, a joint venture between Minneapolis-based Capital Partners and New York-based DRA Advisors paid $96.05 million in September 2019 for industrial properties in the St. Paul Midway.
In June 2018, Capital Partners and Investcorp purchased the nine-building Greenfield Industrial Portfolio totaling 990,879 square feet of space for $58 million, and the 11-building Tryperion Logistics Portfolio in January 2018 for $50.8 million.
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