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Friday, July 03, 2009
FedEx Purchase Year's Largest
By Richard Metcalf
Copyright © 2009 Albuquerque Journal
In a deal that trumps the tight financial markets, a pair of West Coast commercial real estate investors have purchased a majority stake in the new FedEx freight terminal on the West Side.
The asking price for the 37,265-square-foot building on 22 acres was $22 million, which Tim Trainor of Bethesda, Md.-based CoStar Group called the biggest confirmed sale of a commercial property in New Mexico this year.
The deal had less to do with the building and land, however, than it did with the fact that FedEx is the tenant, said Angelo Brunacini of Brunacini Development Co., which built the terminal specifically for the Memphis, Tenn.-based shipping company.
A publicly traded and nationally recognized company, FedEx moved into the terminal in late February and has a 10-year renewable lease. The company's stability and the length of its lease made the property attractive to numerous potential buyers, but the problem was getting financing, Brunacini said.
“I had to get creative and flexible,” he said.
Working with CB Richard Ellis' Private Client Group in Albuquerque, Brunacini and the buyers agreed to the sale of the property through a tenant-in-common agreement. In essence, the agreement formed a joint venture between Brunacini and the West Coast buyers to complete the sale.
Brunacini said he kept a 25 percent stake in the FedEx property that went toward the down payment, while the West Coast buyers came up with the rest. Ultimately, the sale required 40 percent cash and a 60 percent loan, he said.
“It worked out for everyone,” Brunacini said. “I believed in the project and the tenant – I wanted to stay in – but was still able to diversify my risk.”
The tenant-in-common approach was used because a traditional sale was proving just about impossible, said Joel White of the CB Richard Ellis Private Client Group. Potential buyers were unable to come up with the huge down payment required by lenders to make the investment purchase.
“This may not be possible with every deal,” he said. “Deals have their own complexities and intricacies.”
In another example of investor interest in Albuquerque's commercial real estate market, CB Richard Ellis was also involved in the sale this week of a shopping center on the West Side for more than $10 million, said Patti Peixotto, also a member of the Private Client Group.
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