Heritage embarks on $100m JV acquisition

Real Estate Weekly,  Oct 17, 2007  

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Heritage Capital Group, LLC has acquired three distribution centers from KB Toys. The firm joined with equity partners Barrow Street Capital, LLC and Greenfield Partners, LLC in the $77.5 million investment.

Totaling 2.2 million square feet, the properties are located in Clinton, N.J. (730,000 s/f); Glendale, Ariz. (620,000 s/f); and Montgomery, Ala. (840,000 s/f). KB Toys has leased back the entire portfolio for six months. Thereafter, KB will remain in 480,000 s/f at the New Jersey building and 375,000 s/fat the Arizona property. The Alabama property will be vacated.

"This portfolio is a terrific investment for us, with three outstanding properties and the opportunity to create significant value by leasing up the vacant space when it comes online," noted Jeffrey Greenberg, the Heritage Capital Group principal who spearheaded the acquisition. "We are especially excited about partnering with Barrow Street and Greenfield for the first time. We are a strong match in terms of chemistry and our shared outlook on real estate."

Tom Consiglio of Resource Realty represented KB Toys in negotiating the sale, while Jon Mikula of HFF secured debt financing through Capmark Financial Group and together with HFF Securities arranged the equity partnership on behalf of Heritage Capital Group.

"KB Toys recognized that it had over capacity in their distribution network and tremendous value in its real estate," said Consiglio. "We studied many alternatives to unlock that value, and the sale with a partial sale lease-back gives KB the opportunity to capture that value while creating operating efficiencies."

In June, Heritage Capital Group purchased Plaza Nine, a 112,568 s/f, Class A office property in Woodbridge, N.J. That $22 million acquisition represented the first purchase by the newly established investment entity. The asset has since become part of the Barrow/Greenfield joint venture with Heritage, which is valued at more than $100 million.

COPYRIGHT 2007 Hagedorn Publication
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