March 24, 2021 — By Joe Clements
WILMINGTON — They were not quite gone in 60 seconds, but AIG Global and Novaya Real Estate Partners have realized a speedy payday from their joint venture which has harvested a 700,000-sf flex/industrial portfolio for $151.8 million to BentallGreenOak via CBRE Capital Markets, the deal coming less than two years after its sellers acquired the holdings which are scattered between Billerica and Wilmington and into southern New Hampshire. Bank of America loaned $90.5 million to facilitate BGO’s continued foray into the regional industrial arena after spending $43.1 million earlier this month in Mansfield’s Cabot Industrial Park for a seven-building assemblage purchased in a joint venture with The Seyon Group. BGO separately bought another Novaya-held building in Hudson, NH, to end 2020, that a 215,000-sf warehouse withclear heights to 32 feet.
AIG/Novaya’s venture initially took nearly six months to purchase its nine-building portfolio, a delay made at the behest of its prior steward, a family-owned group needing to craft an exit strategy from long-held buildings at 16, 18 and 29 Esquire Rd. in Billerica, plus four properties on Research Drive in Wilmington and a two-building development in Londonderry, NH. The Granite State CRE at 34 Londonderry Rd. traded in the waning days of 2018 followed in January 2019 by the Billerica closings. AIG and Novaya finalized its purchase in June 2019 with the Wilmington flex buildings at 200, 500, 600 and 800 Research Dr., those brick-faced structures comprising over 450,000 sf of the portfolio.
The holdup did not faze the AIG/Novaya efforts, however, with founding principal Peter Carbone III explaining “a perfect storm” of events coalesced to make stabilization of the package proceed smoother than that generally found for an investment, especially one as substantial and with multiple fronts to juggle. “It is one of the largest and most complex we have handled,” Carbone recounts while confirming it proved among the quickest endeavors his firm has processed as its 10th anniversary is celebrated, a stretch during which time Novaya has demonstrated a turnaround strategy often ahead of the standard CRE hold period of between five and seven years. Even though about half of the period owning the cross-border portfolio it has now divested came with the Covid-19 crisis roaming the New England landscape, Carbone says the landlords found a receptive tenant audience which led to over 300,000 sf of new leases or renewals inked across the portfolio to where there is now just one block of about 35,000 sf remaining before 100 percent occupancy, and that space on Research Drive has a letter of intent out that would complete the tenant roster. In Londonderry, for example, AIG/Novaya renewed paper company Lindenmeyr Munroe for all 62,000 sf in one building and filled the second similarly sized property between a trio of firms. In Wilmington, robotics and
software firm Symbotic renewed at 200 Research Dr. for over 60,000 sf through 2025, while Applied Physical Sciences Corp. signed a new lease there for 30,000 sf to 2026 and another commitment was secured with Universal Floors Inc. in that property that is comprised of 151,000 sf.
“It really was a perfect storm of events that came together at the right time,” Carbone recounts in noting sticker-shocked tenants have been pushed out of the Boston and Cambridge markets seeking alternatives with features such as high ceilings, efficient floor plates and the ability to accommodate multiple functions such as light manufacturing. Growing sectors such as e-commerce and life sciences have increasingly turned to flex buildings, he explains, and that has caught the attention of CRE investors further spurred by record low interest rates and pandemic-related struggles for traditional asset classes such as hotels,
office and retail. AIG and Novaya also made capital improvements to the portfolio such as new roofs and HVAC upgrades that stoked even more activity from both the tenant and investor communities, he outlines. The climate was so heated the owners instructed CBRE to identify a “targeted group” of capable suitors versus conducting the typical broad-based campaign and ultimately found bidders willing to deliver “what we had thought its value should be,” Carbone recounts in praising the brokerage group for its efforts, that team’s leadership including Executive VPs Scott Dragos, Douglas Jacoby and Christopher Skeffington.
“They did a great job,” Carbone says of the contingent that also includes First VPs Anthony Hayes, Timothy Mulhall, Roy Sandeman and Vice President Daniel Hines. That squad is well-versed on the regional flex/industrial arena, and particularly Wilmington where CBRE processed nearly $1 billion in 2020 sales for a variety of well-known landlords cashing out on the sudden appetite for that product type.
Carbone also offered kudos to BentallGreenOak for its execution of the agreement. “I congratulate them for doing what it took to get the deal done,” he says, adding further confidence was established from the earlier agreement on the Hudson building at 36 Executive Dr. “They are very good to work with.” The largest trade in the mix was for 200 Research Dr. which parlayed its robust leasing activity to sell for an even $40 million, while the 108,500-sf building at 500 Research Dr. fetched $29 million and 600 Research Dr. went for $24.7 million. The overall sales price of $151.8 million amounts to $216 per sf.
AIG/Novaya had spent $81 million to acquire the portfolio, or $115 per sf. As indicated, Novaya has shown an ability to reposition its CRE investments in an especially timely manner, with other recent examples including the turnaround of 300 Baker Ave. in Concord a year ago next month for $74.5 million after buying it in December 2016 for $64.5 million. The firm paid $4.5 million in March 2016 for One Tech Drive in Andover and had it out the door by Sept. 2019 for $8.2 million while its 55 Technology Dr. asset in Lowell began with a $7.5 million purchase in March 2017 and concluded exactly three years later next week when it brought $12.9 million in the final week of March 2020.
Besides Carbone, Novaya founding Principals are James M. Alden, R. Scott Tully and Jeffrey Theobald. With the latest initiative completed, Carbone says Novaya continues to scope out additional opportunities in the flex/industrial realm from Greater Boston to the New Jersey/Philadelphia area where it has been active for several years but is also eyeing other asset classes it sees upside in such as multifamily properties including value-add investments. “We expect to be busy this year,” he tells Real Reporter regarding the acquisition’s activity.