First Makes Second Sale

January 4, 2008
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GRAND RAPIDS — The transaction may very well be the largest industrial property sale ever recorded in the metro area in regard to the number of buildings that changed hands in the deal.

First Companies Inc. of Grand Rapids recently sold 16 buildings with 479,057 square feet of space to CORE Reality Holdings Inc., a real estate investment firm based in Newport Beach, Calif. Most of the space is leased and occupied.

The sale was the second that First Companies made with a California buyer in the last few months. And the buy was the second major purchase that CORE Reality Holdings made of West Michigan industrial facilities over the past few years.

Grubb & Ellis|Paramount Commerce of Grand Rapids brokered the deal with Venture One Real Estate, located in the Chicago suburb of Riverwoods.

The purchase price wasn’t revealed.

GE|PC Investment Advisor Colin Kraay told the Business Journal that out-of-state firms, such as CORE Reality Holdings, are interested in the market because the buildings here are well maintained, largely occupied and affordable. So these companies see the purchases as good investments.

“It’s got a good, steady rental base. They can purchase properties for around replacement value,” said Kraay.

“They can get a good, steady return for their equity and we’re incredibly more affordable than California to purchase real estate. So when asked the question of why they’re buying here, they said, ‘Why wouldn’t we?’”

First Companies closed on a deal with Virtú Investments of San Francisco less than three months ago. That transaction had First Companies selling five industrial buildings, with a total of 230,000 square feet of space, to the California firm.

First Companies President Jeff Baker said his firm put the structures on the market because the time was right to sell. He also said First Companies would continue to manage the properties and reinvest the proceeds from the sale into West Michigan real estate.

“What we like to do is take tenants from birth to maturity. When they get to maturity, the timing is right for us to look at selling these buildings,” said Baker.

Over the last quarter of the year, First Companies sold 21 buildings with more than 700,000 square feet of mostly leased space to two California firms. Baker told the Business Journal that the sales represented about a third of the firm’s holdings in the region.

“It was quite a transaction. We’re still managing and we’re excited about that,” he said.

CORE Realty Holdings isn’t a stranger to the metro market, either. In September of 2005, CORE bought the West Michigan Industrial portfolio that consisted of 11 buildings with 1.68 million square feet of space for $61.3 million.

Grubb & Ellis|Paramount, as the commercial brokerage was known back then, prior to its merger with Commerce Reality, also brokered that deal. GE|PC CEO Duke Suwyn and Vice President John Kuiper handled that first CORE transaction and worked with Kraay on the second deal.

Venture One Real Estate was involved in another local transaction. The company represented Bradley Associates of Chicago when it bought two buildings from Autocam Corp. in June of 2003 and then leased the facilities back to Autocam. The deal included Autocam’s headquarters at 4060 East Paris Ave. SE in Kentwood and a manufacturing plant at 1511 George Brown Drive in Marshall. It was a $6 million transaction that involved 142,000 square feet of space.

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