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Case Study: Deere Road Industrial Portfolio |
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Syracuse, NY |
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History in the Market – The Syracuse, New York real estate market was becoming a second home to FFC Capital with a long successful history of developing, owning and managing the Syracuse Marriott, as well as the acquisition, leasing and disposition of the Telergy Building (formerly the Carrier Building). Through local relationships created over many years, FFC Capital continued to monitor the Syracuse real estate market for investment opportunities. |
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Opportunities |
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Market Strengths – FFC Capital identified a 200,000 square foot multi tenant flex space located in Syracuse, New York. At the time FFC Capital was contemplating the purchase of the project, the Syracuse market had approximately 50,000 square feet of industrial space available in this market sector representing a 2.9% vacancy rate. |
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Site Specific Strengths – The complex, comprised of three separate buildings each ranging from 60,000 to 78,000 square feet, was originally built for and leased to General Electric in the mid 1950’s to operate as an office and manufacturing center. O’Brien & Gere, an environmental engineering firm, purchased the complex in 1994 to remediate the environmental issues and redevelop the project into a multi tenant flex application. The complex is ideally located within one mile of exit 35 of the New York State Thruway. |
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Project Description – It was apparent to FFC that the current owners needed to dispose of these non-strategic assets. The complex was 100% occupied with nine strong tenants with the earliest lease not expiring until the end of 2000. The CAP rate of over 13% compelled FFC Capital to purchase the complex in September of 1999. |
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Performance |
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With the strong tenant base and substantial shortage of industrial flex space in the Syracuse market, this project has continued to increase in value. Current market indications are favorable for a CAP rate of 10% on current net operating cash flows. It is easily conceivable that FFC Capital could see an internal rate of return of over 50% on this real estate asset. |
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