HILLWOOD ACQUIRES 602,500 SQUARE-FOOT INDUSTRIAL BUILDING AT KEY DISTRIBUTION CENTER IN PENNSYVLANIA
Real Estate Developer Eyes Growth in Pennsylvania through New Acquisition
CARLISLE, PA (June 22, 2010) — Hillwood Investment Properties announced today that it has acquired a 602,500 square-foot industrial building at Key Distribution Center in Carlisle, Pa. Hillwood currently owns a number of commercial properties throughout Pennsylvania. This acquisition will further solidify its presence in the market and contribute to the company’s growth in the area.
“With the challenges of the current economy, Hillwood is focused on identifying the right investment and growth opportunities,” said Gary Frederick, Senior Vice President with Hillwood Investment Properties. “We are pleased to acquire a state-of-the-art distribution facility that will expand our presence and commercial activities in central Pennsylvania. The building is available for immediate occupancy and we will be aggressively marketing it to prospective tenants.”
The Class A industrial property is located at 1700 Ritner Highway, also known as U.S. Highway 11, in Carlisle. Constructed in 2007, the facility resides on a 46.3-acre site conveniently located between the Pennsylvania Turnpike and I-81, which are major distribution routes through Pennsylvania serving a number of large population centers in the northeastern United States. Approximately 100 million consumers reside within an eight-hour drive of Key Distribution Center in Carlisle.
Hillwood acquired the property from a joint venture between Higgins Development Partners and Pritzker Realty Group, both based in Chicago, Ill. Michael Bartolacci, Gerald Bower, and Jerry Moore of The Garibaldi Group helped negotiate the transaction.
Despite tough economic conditions, Hillwood continues to seek strategic acquisition opportunities across the nation.
“This purchase reflects Hillwood’s commitment to making strategic decisions that not only make good business sense, but good sense for our local communities.” Frederick added. “Our latest investment in Pennsylvania represents the type of acquisitions and growth on which Hillwood will continue to focus.”
About Hillwood
Hillwood, a Perot company, is ranked as one of the top commercial real estate investors and developers in the country and the top residential developer in Dallas-Fort Worth. The company's developments currently house facilities for 65 companies listed on either the Fortune 500, Global 500 or Forbes List of Top Private firms. In addition to AllianceCalifornia, Hillwood is best known for its development of the 17,000-acre AllianceTexas project, located 15 miles northwest of DFW Airport, and the $420-million American Airlines Center and the Victory district near downtown Dallas. For additional information about the company, please visit www.hillwood.com.
The task of bringing long-awaited jobs to Cecil Commerce Center officially fell on Dallas-based Hillwood when the Jacksonville City Council voted Tuesday to make Hillwood the center’s master developer.
The 16-0 vote capped a year of negotiations that started last summer when the city tapped Hillwood as the top-ranked applicant for the role of master developer.
Despite opposition that came mainly from businesses doing industrial development in Jacksonville, council members have said the commerce center needs a master developer and Hillwood has a track record of success.
“We’re looking forward to them getting busy out there,” Councilman Ronnie Fussell said Tuesday night.
The master developer contract will last up to 25 years and cover as many as 2,800 acres. As Hillwood attracts businesses, the company will purchase tracts of land from the city for construction of distribution centers and warehouses.
Hillwood will call its project Alliance Florida, the same “premier brand” the company affixed to its Alliance Texas and Alliance California mega-developments. Alliance California is at a former Air Force base in San Bernardino.
Opponents of the contract argued the negotiations between Hillwood and the Jacksonville Economic Development Commission resulted in the city agreeing to sell land on the cheap.
Though some council members said the price would probably be higher if the city were just selling land in a straight land deal, they said the price is part of a much larger agreement that requires Hillwood to develop the center or lose its right to the contract.
Mayor John Peyton has supported making Hillwood the master developer, saying the city cannot afford to maintain the “status quo” at the commerce center.
The city and the Jacksonville Aviation Authority took ownership of the commerce center in 1999 from the Navy after the federal government closed the military base. Hillwood will be the master developer of city-owned land at the center. The aviation authority’s land is not covered by the contract.
After winning the hard-fought battle to be master developer of Cecil Commerce Center, Hillwood faces a tall order in translating that political success to where it counts on the ground — construction of industrial buildings.
Hillwood, a Dallas-based company that is among nation’s largest industrial developers, will be in charge of bringing businesses to land where the city attracted just two companies in the past 11 years.
“We’ve got to deliver on our promises now,” Preston Herold, vice president of Hillwood Investment Properties, said after City Council approved the master development agreement Tuesday night.
Herold said Hillwood has talked with a couple of businesses about locating at Cecil Commerce Center. He said Hillwood wanted to get the master development approved before moving ahead with those discussions.
“That will be job number one — getting back to those folks,” he said.
Herold will move to Jacksonville to lead Hillwood’s marketing of the commerce center. He said Hillwood will set up its office in a former Navy building at the commerce center. The city and the Jacksonville Aviation Authority obtained thousands of acres of land from the federal government in 1999 after the Navy base closed.
One change that will take effect immediately when Hillwood takes over as master developer is real estate brokers will be able to earn fees when their clients decide to locate at the commerce center. The city hasn’t paid broker fees, but brokers will have a financial incentive to have their clients consider Cecil when Hillwood is on board.
The master development agreement with Hillwood can run for up to 25 years, but it establishes a series of benchmarks for development that Hillwood must meet along the way or else it will lose the contract. Those requirements are based on the square footage of construction.
Within three years, Hillwood must construct a 400,000 square foot building, regardless of whether Hillwood has tenants for the building or not.
In 10 years, it must have built 2 million square feet, and by the end of 20 years, the total tally must be at least 7 million square feet.
Since 1999, the city has struck two deals at the commerce center by selling land for the 1 million square foot Bridgestone Americas Tire Operation center and the 235,000 square foot Saft high-tech battery manufacturing plant.
City Councilman Daniel Davis, whose Westside district includes the commerce center, said he isn’t expecting Hillwood to come roaring out of the gate.
“We all know what kind of economic environment we’re in,” he said.
But he said he’s confident that Hillwood’s connections with industrial businesses will result in tenants and jobs coming as they building are built.
“I’m measuring success as consistent takedown of lots and consistent new job creation at Cecil,” he said.
The City Council voted 16-0 Tuesday to make Hillwood the center’s master developer. The unanimous support capped a year of negotiations that started last summer when the city tapped Hillwood as the top-ranked applicant for the role of master developer.
The master developer contract will cover as many as 2,800 acres. As Hillwood attracts businesses, the company will purchase tracts of land from the city for construction of distribution centers and warehouses.
Hillwood will be the master developer of city-owned land at the center. The Jacksonville Aviation Authority’s land is not covered by the contract.
When Dallas-based Hillwood Investment Properties first put its 600,000-square-foot industrial warehouse on the market in July 2009, it didn’t get many takers.
It wasn’t until after pulling the West Point Trade Center back off the market that the Dallas-based office and industrial development company found a suitable buyer in CB Richard Ellis Realty Trust, which bought the property Dec. 30 for $29 million.
“This property benefits from an excellent location in the most desirable and active submarket in the Jacksonville (area),” said Chuck Hessell, director of investments for Princeton, N.J.-based CBRE Realty Trust in a press release announcing the sale.
The property at 2300 Pickettville Road, which is 100 percent occupied by beverage maker Dr Pepper Snapple Group (NYSE: DPS), was actually one of three properties the trust bought at the same time for a total of about $70 million. The other two are fully leased office buildings totaling 222,600 square feet in Miramar.
Hillwood spent about $17.1 million developing the West Point Trade Center in 2008. Dr Pepper Snapple has leased out the space since it opened in 2009. The lease expires in 2019.
West Point Trade Center
Location: 2300 Pickettville Road
Value: $29 million
Size: 601,500 sq. ft
Date: December 2009
Buyer: RT West Point Jax LLC
Buyer’s agent: WND
Seller: Hillwood Investment Properties
Seller’s agent: Terry Quarterman, Jeff Nelson; CB Richard Ellis
Vacuum cleaner maker Royal Appliance Manufacturing is relocating its Ontario distribution operations to a larger facility in San Bernardino.
Its new landlord says the move reflects a trend of growing companies seeking out more favorable business terms in a buyer's market for industrial space.
Royal will begin operations in early May in a newly constructed building purchased in December by Hillwood Investment Properties. According to statements from Hillwood and CB Richard Ellis, Royal has signed a five-year lease for a 415,000-square-foot space at Hillwood's Alliance California industrial development, built on land that once housed Norton Air Force Base.
Officials of Ohio-based Royal, whose brands include Hoover and Dirt Devil, could not immediately be reached for comment. Financial terms were not disclosed for the deal that will bring Royal to the space at 925 Ninth St.
John Magness, a Hillwood senior vice president, said by phone the new location will give Royal about 65,000 more square feet than it had in Ontario, and it will be paying less for rent, taxes and other overhead. The building is also located in a state-sponsored county enterprise zone that gives tax credits for future job creation.
Magness said the current economy has prompted many companies to shop around for space before renewing leases, and Hillwood has received more inquiries about its properties this quarter "than the past three quarters combined."
In December, Hillwood also purchased another building in the same vicinity, with more than 600,000 square feet of space. At the time, Magness said that because Hillwood got a favorable price for the buildings, it is able to offer lower rents to potential tenants.
Hillwood is a division of Dallas-based Perot Companies. It is the primary commercial developer of land on the outskirts of what is now known as San Bernardino International Airport.
SAN BERNARDINO, CA-Royal Appliance Manufacturing Co. is expanding its operations by more than 65,000 square feet and relocating to an industrial building owned by Hillwood Investment Properties in a five-year lease for a 415,825-square-foot building at 925 E. Ninth St. The deal marks one of the largest new leases in the Inland Empire so far this year, according to brokers from CB Richard Ellis who represented Hillwood.
Royal Appliance plans to relocate to the new building upon completion of tenant improvements at the beginning of May. Hillwood acquired the building last year from Blackrock in a transaction brokered by the same CBRE team that represented Hillwood in the Royal Appliance lease: Frank Geraci, Walt Chenoweth, Juan Gutierrez and Patrick Wood of CBRE's Ontario office.
Chenoweth says the new lease produces positive cash flow for Hillwood soon after an acquisition in a slow market. Royal Appliance, which now occupies a 349,000-square-foot facility in the West Inland Empire, manufactures brands including Hoover and Dirt Devil vacuum cleaners.
Royal Appliance was represented by Jeff Smith and Jeff Huberman of Lee & Associates. The five-year lease is valued at more than $5 million.
In December, Hillwood Development also acquired a sister building at the same location. CBRE is also the leasing agent for that building, which is a 609,000-square-foot warehouse at 7776 E. Tippecanoe Ave.
Both buildings are located in the San Bernardino Enterprise Zone at Hillwood's AllianceCalifornia project at the former Norton Air Force Base. According to John Magness, president of Hillwood’s operations in California, the AllianceCalifornia redevelopment project now totals more than 8.6 million square feet.
Hillwood Investment Properties acquired almost 2M SF of vacant industrial buildings: two properties adjacent to Hillwood’s Alliance California development in San Bernardino and the third is the Frankford Trade Center in Carrollton. Specifics weren’t released, but Hillwood prez Tal Hicks says the properties were identified as opportunities. Frankford is a Class A commercial building built in 2000 with renovations expected to finish in 30 days. It's located at the northeast corner of the George Bush Tpke and Interstate 35. It has 660k SF, with 60k of that for office space.
Hillwood Development, the master developer for the land around San Bernardino International Airport, has acquired two new industrial buildings near the project.
Hillwood, which is based in Dallas, did not disclose the purchase price. The company announced the deal Tuesday.
"It's such a price that allows us to make good market deals below what the market was a year ago," Hillwood senior vice president John Magness said. "Put it this way: It's below replacement."
The airport area properties have never been occupied. Hillwood purchased the buildings from a company called Black Rock.
Current economic conditions make it cheaper to buy buildings than to build new ones, Magness said. The buildings, which together have more than 1 million square feet of space, could be used for warehousing or manufacturing, Magness said.
Inland Empire economist John Husing said upon hearing of the deal that Hillwood's purchase is not likely to signal any major changes in the industrial market.
"They saw a good deal and they jumped on it," Husing said, interpreting the news.
Hillwood did not announce tenants for the industrial buildings, the first of which is in the 7700 block of Tippecanoe Avenue and the second in the 900 block of East Ninth Street.
The newly acquired buildings are in the San Bernardino Valley Enterprise Zone, and are adjacent to Hillwood's AllianceCalifornia project. That project includes Stater Bros.
Markets' corporate headquarters and large warehouses used by such companies as Mattel, Kohl's and Pep Boys.
AllianceCalifornia has about 8.6 million square feet of redeveloped land, including the newly acquired buildings.
DALLAS – Hillwood Investment Properties has added more than 1.6 million sf of industrial space to its portfolio, scooping up the Frankford Trade Center in Carrollton and two recently completed warehouses in San Bernadino, Calif.
The 659,340-sf Frankford Trade Center at 1649 W. Frankford Rd. is a vacant, class A building that's undergoing renovation. It was built in 2000, with a 30-acre deal-making location at the corner of the George Bush Turnpike and Interstate 35 and Triple Freeport tax exemption. Its former occupant was locally based Home Interiors & Gifts Inc.
In California's Inland Empire, Hillwood bought Northgate Buildings 10 and 11. The class A buildings, totaling more than one million sf, are adjacent to Hillwood's AllianceCalifornia development, formerly the Norton Air Force Base. The Northgate Buildings are part of the San Bernardino Valley Enterprise Zone. The portfolio addition pushes AllianceCalifornia to more than 8.6 million sf.
"With the challenges of the current global economy, Hillwood is focused on identifying the right investment and growth opportunities across the country," said Ross Perot Jr., chairman of Dallas-based Hillwood.
Tal Hicks, president of Hillwood Investment Properties, added that the company is "committed to making strategic decisions that not only make good business sense, but good sense for our local communities."
FORT WORTH, TX-Hillwood Investment Properties has bulked up its portfolio with the acquisition of assets in Southern California and North Texas. Through separate deals, local company bought the 659,340-square-foot Frankford Trade Center in Carrollton, TX from LNR Partners Inc. and in a separate deal, acquired the 415,825-square-foot Northgate Building 10 and 609,499-square-foot Northgate Building 11 in San Bernardino, CA from Blackrock Realty.
Tal Hicks, president of Hillwood Investment Properties, tells GlobesSt.com that the attraction with both deals was the "price per pound" at which the vacant assets were purchased in the all-cash transaction. Hicks declined to discuss a sales price, though did acknowledge the purchase price was a substantial discount to replacement costs.
Frankford Trade Center at 1649 W. Frankford Rd., was built in 1999 and once served as the headquarters for Home Interiors & Gifts Inc. The company inked a sale-leaseback deal in late 2006 with First Industrial Realty Trust Inc. and UBS Realty Investors, but filed for bankruptcy in 2008, The warehouse-office building, valued by the Denton Central Appraisal District at $17.7 million, was foreclosed on last summer.
"We'll spend approximately $1 million on the building," Hicks says. "It's a second-generation building that needs work done." The work in question, he continues, will include cosmetics, such as interior and exterior painting.
Hicks goes on to say that the California properties, Northgate Building 10 at 927 E. 9th St. and Northgate Building 11 at 7776 Tippecanoe Ave. were completed in June 2009, and won't require anything in the way of upgrades. The California buildings are adjacent to Hillwood's AllianceCalifornia development in San Bernardino, CA.
With these properties safely in its portfolio, Hillwood Investment is on the hunt for more, and Hicks says the company wants to make similar acquisition in Texas, California and other markets. The investor's sweet spot is vacant industrial buildings in excellent locations.
"They don't have to be brand new, they could be second generation, though we like first generation," Hicks adds. "But if we can get a substantial discount to replacement cost for a well-located, functional building, we'll be looking at it."
Hillwood Investment Properties, a division of Dallas-based Perot Co., announced Tuesday it has purchased two buildings totaling 1 million square feet in San Bernardino. Hillwood senior vice president John Magness said the buildings were purchased from investment firm Blackwood, but the sales price is not being disclosed.
The recently completed and unoccupied commercial buildings are adjacent to Hillwood's Alliance California development near the former Norton Air Force Base.
Tenants have not yet been lined up for the acquired buildings, but the space can handle distribution or manufacturing. Magness said Hillwood was able to buy the buildings at a cost that allows it to lease them at lower rates than would have been feasible for the former owner.
Commercial real estate company Hillwood Investment Properties — a Perot Co. — has acquired 2 million square feet of vacant industrial buildings in Dallas and San Bernardino, Calif.
One of the purchases is the Frankford Trade Center in Dallas, a Class A commercial building that was constructed back in 2000. The property is currently under renovation and is located at the corner of the George Bush Turnpike and Interstate 35.
The other two building, which are located in the San Bernardino, Calif. area, also were acquired in a transaction that Hillwood says will stimulate the local economy.
“With the challenges of the current global economy, Hillwood is focused on identifying the right investment and growth opportunities across the country,” said Ross Perot, Jr., chairman of Hillwood.
“We are very proud of our work to redevelop the Norton Air Force Base into AllianceCalifornia and these new acquisitions are an important step in furthering that effort. I am also especially pleased that Hillwood has an opportunity to invest in the Dallas-Fort Worth area — a community of which Hillwood has long been a part.”
Hillwood's new location in Dallas offers the benefit of its Triple Freeport Tax Exemption since it’s part of the Foreign Trade Zone. The development includes 659,340 square feet of space.
Dallas-based Hillwood Investment Properties has bought three industrial buildings, one in Carrollton and two in California, totaling nearly 1.7 million square feet of space.
The local property is in the Frankford Trade Center at the northeast corner of the President George Bush Turnpike and Interstate 35E. The 659,340-square-foot warehouse/office was built in 2000 but is being renovated. It is in a foreign trade zone, which offers tenants certain tax benefits.
Hillwood also bought two newly built structures in San Bernardino. Calif. They are adjacent to Hillwood’s AllianceCalifornia, a redevelopment project of the 2,000-acre former Norton Air Force Base.
The buildings, totaling 1 million square feet, are in the Inland Empire industrial market, about 60 miles east of Los Angeles.
"With the challenges of the current global economy, Hillwood is focused on identifying the right investment and growth opportunities across the country," Chairman Ross Perot Jr. said in a statement.
Hillwood recently celebrated the 20th anniversary of AllianceTexas, a 17,000-acre development in far north Fort Worth, and it also owns the American Airlines Center and land in the Victory district near downtown Dallas.
Hillwood Investment Properties said Tuesday that it has purchased three industrial buildings – two in California and one in the Dallas area.
The real estate company owned by Ross Perot Jr. and his family acquired the Frankford Trade Center in Carrollton near State Highway 190 and Stemmons Freeway. The 10-year-old project has 659,340 square feet of office and warehouse space and is located in a foreign trade zone.
Frankford Trade Center is being remodeled and will be finished in 30 days.
Hillwood also bought two new Northgate industrial buildings in San Bernardino, Calif. The properties have more than 1 million square feet and are next to Hillwood's AllianceCalifornia business park.
Terms of the acquisitions were not disclosed.
"They were all purchased substantially below replacement cost," said Tal Hicks, president of Hillwood Investment Properties. "We are excited about these purchases, despite the uncertainty about where the bottom is in the market."
Hicks said the Carrollton complex was bought from a mortgage servicer who had foreclosed on the property.
The California buildings were purchased from an investor who bought them after they were finished in 2009.
"With the challenges of the current global economy, Hillwood is focused on identifying the right investment and growth opportunities across the country," Perot said. "I am also especially pleased that Hillwood has an opportunity to invest in the Dallas-Fort Worth area – a community of which Hillwood has long been a part."
Hillwood is a major industrial building owner with properties in several states. The company owns the huge AllianceTexas business park in North Fort Worth and the undeveloped portions of the Victory Park project near downtown.
Containerized imports at 10 major U.S. ports are expected to rise in three consecutive months starting in February, breaking a 31-month streak of year-to-year declines, the National Retail Federation and IHS Global Insight said in their monthly Port Tracker report.
“We’ve been seeing hints of a turnaround in our past few reports but this is starting to look like a clear trend,” said Jonathan Gold, the NRF’s vice president for supply chain and customs policy. “If retailers are starting to import more merchandise, it’s because they expect to be able to sell more, and that’s a good sign for our industry and the overall economy.”
By predicting a 9 percent year-to-year increase in April, the new report extended the cautious optimism shown in last month’s Port Tracker, which a forecast year-to-year increases of 16 percent in February and 6 percent in March. Volume through the ports in January is forecast to be down 4 percent. Port Tracker forecasts cover only six months.
Ports surveyed handled 1.18 million TEUs in October, the most recent month for which actual numbers are available. That was up 4 percent from September but was down 14 percent from October 2008. November was estimated at 1.09 million TEUs, down 12 percent from last year, and December is forecast at 1.05 million TEUs, down 1 percent.
The report now expects 2009 to end with a total volume of 12.6 million TEUs at the 10 ports. That would be a drop of 17 percent from last year’s 15.2 million TEUs and the lowest since the 12.47 million TEUs reported in 2003.
“The second half of 2009 has seen an improvement, with ‘less bad’ year-over-year numbers compared with the first half,” said Paul Bingham, an IHS Global Insight economist. “While improving, import container traffic is projected to be weak through March due to the traditional slow season combined with the weak pace of economic recovery.”
The drop in cargo has produced one benefit: All 10 ports covered by Port Tracker – Los Angeles, Long Beach, Oakland, Seattle, Tacoma, New York-New Jersey, Hampton Roads, Charleston, Savannah and Houston – continue to be rated by the survey as “low” for congestion.
