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A fully leased Downtown office building has traded hands for more than twice its assessed value.

309 Monroe Property LLC purchased the 22,792-square-foot property at 309 Monroe Ave. for $3.3 million. The Shelby County Assessor of Property’s 2011 appraisal was $1.5 million.

Brian Califf and Hank Martin with NAI Saig Co. represented the seller, 309 Monroe LLC, in the transaction. 309 Monroe LLC is an entity of Farnsworth Holdings.

The building is 100 percent occupied by the Social Security Administration Office of Disability Adjudication and Review. The property has a 15-year lease to the government with seven years remaining, which made it appealing to the buyer, Califf said.

“The buyers bought it as an investment property based on a cap rate,” Califf said. “So that’s why it sold for that.”

The Virginia-based buyer was put together specifically to acquire government buildings, said Michael Mullis, Farnsworth Holdings principal. The Memphis property is one of several the group has closed on recently.

“Government leases right now are as good of credit as you’re going to get,” Mullis said. “Buyers will typically pay more for better credit deals.”


Source: Daily News Article written by Sarah Baker



Although industrial real estate sales cooled during the recession, transactions have been making a comeback with an uptick last year that is expected to continue through 2013.

But this return from recessionary times marks how the industrial sales market has changed locally over the years.
Michael Mullis, a partner in Farnsworth Holdings, says a lot of industrial product in the Memphis market is now owned by out-of-state investors.

“What I do think is interesting is the lack of local guys buying stuff,” Michael Mullis, partner with Farnsworth Holdings, says.

Years ago, local development firms such as Farnsworth, Belz Investment Co. and Weston Cos. Inc. drove the industrial market.

“It was basically that group building warehouse buildings,” Mullis says.

Consequently, those were the firms that were buying and selling a lot of the industrial product.

“Then all the big guys came to town,” Mullis says. “The market totally flipped. The people who are buying stuff nowadays are out-of-town people.”

The “big guys” are national institutional firms such as Industrial Developments International, Panattoni Development Co. and Hillwood Investment Properties, among others.

Industrial Developments International, also known as IDI, has been particularly active lately.

Last year, it sold two buildings it developed in Olive Branch to Monmouth Real Estate Investment Corp., a publicly traded real estate investment trust.

A 615,305-square-foot building leased by Milwaukee Electric Tool Corp. fetched $28 million while a 234,666-square-foot building leased by Anda Pharmaceuticals Inc. brought $16.2 million.

IDI started as a merchant-build model, meaning the firm built industrial property, leased it and sold it. The Atlanta-based company originally wouldn’t hold buildings on a balance sheet for long, according to senior vice president Kurt Nelson. In the past seven years, IDI has started to hold more buildings longer.

The firm now sells about half of its developed properties, keeping the other half on its own balance sheet or through a joint venture.

“It comes down to more of managing our finances and our balance sheet and having the assets we want to have,” Nelson says.

A lot of sales activity is driven by what institutional investors are willing to pay versus the cost for a local group to develop a building, according to Mullis.

“The institutional guys are willing to take less than a guy who risks his own money for it,” Mullis says.

Larger companies are sometimes more willing to take a lower capitalization rate and charge less for rent.

Tenants don’t really care who owns the building and if they can rent space for less than the local guy, they often do it.

“Farnsworth has been fighting this battle since the big guys came to town,” Mullis says.

Local companies like Farnsworth would like to buy more industrial property, but are also hampered by stagnant rents in the Memphis market. That said, there are still several institutional buyers circling the market, often looking for more than one property.

Mullis says there are still a good amount of people interested in buying portfolios, possibly betting on rent increases or just looking for a stable return.

Hillwood Investment Properties acquired a 556,000-square-foot warehouse in Airways Distribution Center in Southaven this year as part of an overall portfolio purchase which spanned five markets.

Many of the companies looking to buy industrial real estate, locally or nationally, are thinking of slow and steady investments, according to Nelson.

“I think there is a lot of appetite on the buying side from pension funds and other institutional kinds of buyers,” he says.

It’s slowly getting back to pre-2008 levels, when activity was robust. After investors ran to the sidelines, capital dried up. The comeback has been slow.

“People weren’t going to sell property at a loss just because in the short term the underwriting and the market values had decreased,” Nelson says. “So I think capital came back to the market and so transaction volume started coming back in 2011 and 2012. That’s been the case everywhere across the country.”

Nelson expects more of the same this year. Moves by the Federal Reserve to lower interest rates will continue to spark investment in real estate, he says.

“As you move out of treasuries and government securities, you hit Class A core real estate pretty quickly as far as relatively low risk, especially for those who need to create income as opposed to buying stock they can sell in 10 years.”

Source: Memphis Business Journal. Written by

Airport-Area Warehouse Sells for $2.3 Million

A Class B warehouse in Airport Industrial Park has sold for $2.3 million, more than four times its price at a foreclosure sale two years ago. Northbrook, Ill.-based BCL-Memphis LLC bought the warehouse at 4049 E. Raines Road from Memphis-based Progression Realty, which paid $501,500 for it in August 2010.

Brian Califf and Hank Martin with NAI Saig Co. negotiated the deal for the seller.

The warehouse, which has more than 140,000 square feet, was built in 1973 and is situated on about 8.6 acres on the south side of East Raines between Pilot Drive to the west and Delp Street to the east.

The Shelby County Assessor of Property’s 2012 appraisal is $1.9 million, down from a 2011 appraisal of $2.8 million.

Source: The Daily News Online

Conklin Metal Industries is expanding its operations into Memphis, giving the Bluff City’s industrial real estate market some new blood.

The Atlanta-based wholesale distribution company signed a 45,000-square-foot lease at 4049 E. Raines Road for its first operations in Memphis.

4049 E. Raines map

The company distributes goods to the HVAC market with an emphasis on the commercial aspect of that business, according to Bill Smith, its recently hired regional manager.

“They’ve wanted to expand into the Memphis market for years because it’s a pretty strong HVAC market with quite a lot of business,” he says.

The company will be moving into its new offices by February and will eventually employ 14 people, including sales representatives, truck drivers, warehouse workers and inside sales representatives. It has already hired Jeff Shoffner as branch manager.

One reason Conklin Metal liked the building is because it is right in the middle of an HVAC distribution sector.

“There are probably 10 HVAC distributors in that area so we could be in there with all the other suppliers,” Smith says.

The company recently started operations in Birmingham, Ala., and plans to open a new operation in New Orleans about the same time as its Memphis location. It also has locations in Atlanta; Greenville, S.C.; Sanford, Fla.; and Mobile, Ala.

“Conklin has been very successful, even during the slow economic times,” Smith says. “They’ve done a good job looking to expand because they’re such a well-run company.”

A lot of its distribution hinges on the construction trade, according to Smith, but while residential has been hurting over the past two to three years, commercial construction hasn’t seen as bad a drop-off.

The Memphis operation will be servicing Nashville, Little Rock, Jackson, Tenn., Paducah, Ky., and Jackson, Miss., among other accounts throughout the Mid-South.

The company has an eye on expanding in Memphis.

“It depends on how well things get going,” Smith says. “We’d like to continue to expand once we get a base here in Memphis and other locations.”

Conklin Metal is moving into a 147,000-square-foot building that also houses Contract Furniture. That company, which manufacturers and assembles furniture for various residential developments, occupies 72,000 square feet.

Progression Realty LLC, which consists of partners Michael Mullis, Tommy Farnsworth Jr. and Tommy Farnsworth III, owns the building.

The three also operate as Farnsworth Holdings, which serves as an umbrella organization for various business entities.

New-to-market tenants choosing Memphis is a positive development, according to Mullis.

“I think it’s really important because it seems like the last few years, we’ve been moving people from one part of town to another because the rents have been so depressed,” he says. “It’s been a really good tenant market. It’s still a good tenant market.”

Other than taking space off the market, new tenants give the market true new absorption versus moving space from one side of town to another, Mullis says.

“It also shows viability in the market, not just to those within the market, but those outside of it,” he says.

Mullis is seeing that in the current economy, many decisions are being driven by economics, with tenants choosing one building versus another based on total operating costs primarily.

This summer, Progression Realty purchased the building at 4049 E. Raines as well as another 147,000-square-foot building at 3980 Premiere. It has been actively looking to buy buildings across the country, but specifically the South.

“We haven’t found the right opportunities until this summer,” Mullis says. “There is still a disconnect between buyer and seller, whether that seller is the owner or the bank. There is a healthy divide between people like us with cash and sellers who bought too high and are unwilling to sell it at a loss or a lender holding out hope things are going to be better.”

Mullis doesn’t expect the sales market will get back to where it was in 2005 to 2007, when money was cheap and buyers could borrow the full purchase price without much risk.

“That merry-go-round has stopped.”

Conklin Metal Industries Wholesale distribution Regional manager: Bill Smith Local address: 4049 E. Raines Road Phone: (404) 688-4510 Website:

Source: Memphis Business Journal Written by:

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