Iron Peak Properties Sells DFW Business Park
Iron Peak Properties announced the sale of one of their business parks located in the Dallas Fort Worth metroplex and which closed this past September.
Though Iron Peak did not share the sale price, the company did disclose achieving a 37% IRR and 85% ROI on the sale, since acquiring the property in September of 2017.
The property, a 45,000 square foot business park, has 50% of the space occupied by 2,000 - 6,000 SF tenants and the remaining 50% by the new owner. It is centrally located between Dallas and Fort Worth, and less than 10 minutes from the Dallas Fort Worth International Airport.
When asked why they chose to sell the property, Iron Peak said that they had successfully brought rents to market on the smaller spaces and, per CEO Kim Hopkins, the "economics made more sense for all parties for this to be an owner/user investment".
Kim added, "We learned a lot from this property. In particular, it's all about having the right team in place with people who know more than you about what they do and can be your guide and advocate". Iron Peak Properties was represented by George Jennings of Holt Lunsford Commercial on the sale. "It would have been hard not to make a sale work with George at the helm. He is a clear thinking, responsive deal maker and a very likeable person. We didn't get a chance to meet in person until the day before we closed and still worked great together," said Kim. She added, "We also have a great attorney who really made the deal move, but I'm not allowed to look at her invoices because it makes me grumpy."
COO Ben Hopkins added that managing this asset was "a major headache at times, actually over 80% of the time," but that he was happy with the end result.
When asked if they planned to do a 1031 exchange, Iron Peak said it comes down to finding a property that makes economic sense. "We see so many deals that have a 1-2% cash on cash with our underwriting. I'm not sure what metric investors are using to evaluate these properties, but my spreadsheet sniff test yields a resounding 'No'." On the other hand, the upside of a 1031 is not just redeploying your original capital, but deploying the capital you made on the sale. "You're getting an infinite return on that new capital compared to if you hadn't sold the property or if you gave it to Uncle Sam, so that certainly helps the economics." Kim says.
In regards to what they would look for in the next purchase, Ben said "we'd like to get back to the pure multi-tenant industrial product type with no tenant occupying more than 20% of the space." He calls these kinds of spaces "industrial apartments" because of the diversified risk from multiple units, the quick turnaround with minimal tenant improvements, and the shorter lease terms. Kim says, "It's got all the benefits of multi family with the added perks of longer leases, business tenants, and no one calls you in the middle of the night if the toilet breaks." Ben counters, "Except for that one time with the busted water pipe". "Well, there's never a dull moment," adds Kim.
Iron Peak Properties owns and operates over 250,000 square feet of multi and single tenant industrial real estate in Texas, Oregon, Washington and Utah. Their website and more information can be found at www.ironpeakproperties.com