Monday, July 25, 2016

Big Buyer Revealed for Liberty Property Trust Portfolio

It turns out the big buyer with which Liberty Property Trust said it was in discussions for a sizable portion of its suburban office and flex is a familiar name.

Workspace Property Trust said it has finalized an agreement to buy 108 office and flex buildings in four states from Liberty Property for approximately $969 million. Led by industry veterans Thomas Rizk and Roger Thomas, Workplace is the same firm that purchased 41 office and flex buildings in Horsham, PA from Liberty Property at the end of 2015 for approximately $245.3 million. At the time, Workspace said the acquisition marked the beginning of a strategic plan to build a portfolio of suburban real estate assets in the Northeast U.S.

Workspace is bringing in global principal investment firm Safanad as its partner on the acquisition, which is expected to close late in the third quarter of this year. The deal will boost Workspace's total portfolio to approximately 9.9 million square feet consisting of 149 properties in five markets.

Properties included in the upcoming acquisition total 7.6 million square feet and are located in Arizona, Florida, Minnesota and Pennsylvania. The portfolio is 88.9% and breaks out by property type as 5.1 million square feet of office space, 2.1 million square feet of industrial/flex space and 406,678 square feet of warehouse/distribution space.

In addition, the Arizona and Florida portfolios include nearly 27 acres of developable land.

Portfolio being acquired from Liberty Property Trust
Market         Bldgs.      Sq. Ft.
Arizona             14 1,078,652 (and 18.1 acres)
Minnesota     19 1,488,832
Pennsylvania     30 2,075,764
South Florida      11 1,136,020 (and 8.6 acres)
Tampa              34 1,799,568
Source: Workspace Property Trust

Workspace Property Trust is a partnership between Rizk Ventures, Forum Partners, JMP Group and EverWatch Capital. WPT CEO and founding principal Thomas Rizk is the former president and chief executive of Mack-Cali Realty Corp. Thomas was part of the original team under Rizk that took Cali Associates public in 1994. At Mack-Cali, Thomas served as executive vice president, general counsel, and secretary.

"We are excited about entering into this new relationship with Safanad and this acquisition represents the next step of our strategic plan to build a portfolio of high quality, well-positioned suburban real estate assets," Rizk said in announcing the $969 million acquisition agreement.

Safanad is a global principal investment firm with offices in New York, Dubai and London. Last year, Safanad backed student housing developer Aspen Heights to acquire newly developed student housing properties at large universities as part of a $400 million agreement to recapitalize a portfolio of student housing properties owned by Aspen Heights and its investment partners.

"At Safanad, we align ourselves with experienced industry partners through carefully selected investments," said Kamal Bahamdan, the investment fund's founder and CEO. "We are looking forward to working with Tom, Roger and the rest of the Workspace team who have extensive experience and a distinguished track record of creating value in suburban office markets."

At the time of its first acquisition from Liberty, Rizk said he saw a similar opportunity for the suburban market when he took Mack-Cali public. "There are some interesting parallels between the current market environment and when I originally deployed a similar strategy after taking Cali Realty public in 1994," he said. "We intend to use our deep relationships and strong market knowledge to aggressively pursue both marketed and non-marketed transactions," adding the firm planned to target transit-oriented assets located in near-city submarkets within the Northeast corridor.

For Liberty, the sale marks a major step in its ongoing strategy launched in 2011 to reposition its portfolio away from suburban office and flex holdings in favor of industrial property and new development.

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