VEREIT completed a disposition of its interest in a jointly-owned office campus consisting of six office buildings in Pleasanton, CA. The campus serves as the corporate operations center for Clorox, supporting functions such as corporate legal, human resources, accounting and finance, as well as Clorox's engineers and R&D employees.
Due to favorable appreciation, the sale of this asset generated revenue for the portfolio and positioned VEREIT for a reduction in its secured and floating rate debt. This transaction helped VEREIT surpass its disposition goal of $2.2 – 2.4 billion by the end of 2016, while strategically reducing exposure to non-controlled joint ventures and office properties.
VEREIT purchased three fulfillment centers in two states occupied by Amazon, the world’s largest online retailer. The total size of the three warehouse portfolio is approximately 3.0 million square feet.
The properties benefit from a skilled, employable workforce and a key southeast location with favorable proximity to major cities including Birmingham, Atlanta, Charlotte, Nashville, Memphis and Charleston. Each property has beneficial access to the Chattanooga or Columbia airport for commercial shipping, and the Columbia location benefits from good access to the Port of Charleston. Each property is subject to a long-term lease. Based on the credit quality of the parent company, a long remaining lease term, new construction and good location, VEREIT added the Amazon portfolio to its collection of mission-critical industrial properties.
IFM Efector, Inc. sells electronic sensing devices used in automation applications in the United States and Canada. VEREIT partnered with one of the nation’s leading developers, Trammell Crow Company, to develop a 45,131 square foot build-to-suit office building. This property serves as the new corporate headquarters for the company, which was previously located in Exton, PA.
The property is part of a business park that includes several other new properties in a suburban office market approximately 30 miles northwest of the Philadelphia CBD. Due to its location near several freeways and interchanges within several miles, the property is easily accessible from Philadelphia, Wilmington, DE, and a variety of Philadelphia suburbs. At closing, IFM Efector entered into a pre-negotiated, long-term net lease.
In April 2013, VEREIT participated in a joint venture purchase of two office towers leased to AT&T, Inc. (S&P: ‘A’). The properties are located in the Midtown submarket of Atlanta, the second largest business district in the metro area and one of Atlanta’s most prestigious and dynamic business districts. The two buildings contain a regional headquarters, a network operations call center, disaster recovery facilities, marketing, business development and client development for the entire Southeast.
After considerable property value appreciation, VEREIT disposed its interest in the assets. A general cap rate compression trend has been driven by a combination of low interest rates and investor demand for assets with strong tenant credit located in primary markets. The transaction was part of VEREIT’s strategy to cull non-controlled joint ventures and allowed the Company to reduce balance sheet debt.
Chandler Gateway is a 259,535-square-foot shopping center that was anchored by The Great Indoors and Hobby Lobby at the time of purchase in Chandler, AZ. When The Great Indoors showed signs of exiting the lease, VEREIT engaged a potential new anchor tenant early in the process.
VEREIT was able to add a better traffic generator at the Arizona power center. By signing Walmart to a new long-term lease, VEREIT exceeded the pro forma for the shopping center and improved credit quality. Attracted by the increased traffic with the addition of the Walmart Super Center, the Leasing team signed seven additional new tenants, adding more than $500,000 of annual Net Operating Income (NOI).
When the lease was nearing expiration for a quick-service restaurant in Anchorage, AK, the franchisee/tenant was in a challenging position. The building was in a strong market, but the property was older and required capital expenditures to extend the agreement with the franchisor. The possibility of a vacant location requiring upgrades could present a challenge in re-leasing the property.
VEREIT’s Asset Management team had a 16-plus year relationship with the franchisor, which allowed the team to explore options to keep the property open. The franchisor stepped in to operate the store on an interim basis while simultaneously locating a new franchisee who would renovate the building. The new franchisee entered into a 20-year lease and took over a store in a strong location. VEREIT was able to partner with the franchisor to address a potentially challenging situation because of the team’s deep relationship.