Equity group purchases 10 buildings at industrial park
By Marilyn Bowden
One of the nation's largest private equity groups paid $21.7 million for a portfolio of more than 420,000 square feet of industrial property at Palmetto Lakes Industrial Park.
Washington, DC-based Carlyle Group, doing business as Palmetto FlexSpace, bought 10 buildings that encompass about 25 acres at 4784 NW 167th St., said Steve Nostrand, who negotiated for the seller, The Adler Group.
"It's really a mixed-use portfolio," he said. "A great part of it is built out as flex space, but there is also retail and showroom space along the Palmetto Expressway.
"There were more than 50 tenants occupying space up to 35,000 square feet at time of closing."
Mr. Nostrand said The Carlyle Group, a diversified company with investments all over the world, found the purchase advantageous for a number of reasons.
"First, a lot of tenants are rolling over in the next couple of years, so there is an opportunity to raise rents," he said. "Market rents have increased because of the shortage of class B quality in this product type.
"Although a lot of newer product is being built, the rates are significantly higher for new, so there is a large market for users who don't want or need new but are willing to pay more for class B industrial space."
Second, Mr. Nostrand said, "Carlyle is a good operator with a lot of experience in controlling expenses, and that will bring more money to the bottom line."
Finally, he said, the county's economy is improving.
"Users for this type of space, such as importers and exporters, are slowly coming back," he said. "We have seen business increases in prospects for small-tenant space in the past 18 months.
"Put all that together and it makes sense for them to be here."
Carlyle, which bought into The Floridian on South Beach about eight months ago, is looking for more opportunities in the area, Mr. Nostrand said.
"South Florida is one of the top markets they want to be a top player in," he said.
The mega-company tends towards long-term planning, he said, and typically looks at a deal such as the Palmetto Lakes portfolio as a seven- to 10-year investment.
"My family has always been in the real estate business," said Michael M. Adler, chairman & CEO of The Adler Group, "and it's always a bittersweet experience to sell some of our properties.
"That said, I think they got a good buy and it was a good opportunity for us to meet our business needs and continue to grow our company.
"In this particular cycle of investment, a transaction like this one augments the rate of return for our investors because of the appreciation on the asset side.
"It only makes us desirous to buy more real estate."