Please ensure Javascript is enabled for purposes of website accessibility

Subdivide and Conquer

  • By
  • | 11:00 a.m. July 17, 2015
  • | 2 Free Articles Remaining!
  • Tampa Bay-Lakeland
  • Share

BUYER: Agellan Capital Partners Inc. subsidiary General Diversified Partners Inc. (6422 Harney Road LP), Toronto, Ontario
SELLER: Regions Bank (LMIW II LLC)
PROPERTY: 6422 Harney Road, Tampa
PRICE: $18.25 million
PREVIOUS PRICE: $18 million, February 2013

With a location near one of Tampa's most desirable transportation hubs, room for improvement and a bank owner, the former Kash n' Karry Food Stores distribution center and corporate headquarters offers a lot to Agellan Capital Partners.

The Toronto-based investment firm purchased the 683,750-square-foot facility for $18.25 million, equal to $27 per square foot.

Built in 1976, the property features more than 430,000 square feet of 29-foot clear/high dry warehouse space, 183,000 square feet of 27-foot clear/high cold storage space and a 53,000-square-foot, three-story office building. The property, northwest of where Interstate 75 and Interstate 4 connect, near Hillsborough Avenue, was subdivided after the relocation of Kash n' Karry. It was 65% occupied at the time of the sale.

Part of that vacancy stems from the property's recent ownership troubles. In February 2013, Cornelius, N.C. real estate developer Fred Godley — who had owned the complex since December 2003 — sold the property to Tampa Warehouse LLC, an entity he controlled with four other North Carolina groups. Tampa Warehouse LLC filed for Chapter 11 bankruptcy 10 months later. Region Bank affiliate LMIW II LLC acquired the property, through a deed in lieu of foreclosure, in October 2014.

Brian Rettig, Gary Bauler and Dale Peterson of CBRE's Tampa office represented the seller in the most recent sale. CBRE, which has managed the facility since 2003, will continue to lease and manage it for the new ownership.

Agellan Capital Partners expects to make a number of renovations to the property, Rettig says. That includes modernizing and upgrading the refrigeration space, replacing the roof and converting the fire sprinkler to an early suppression fast response system. It will subdivide the vacant space down to 50,000 square feet. “There's a much deeper bench of prospects at that level,” Rettig says.

That subdividing business model is familiar to Steven Kossoff, managing director of Tampa-based Meridian Development Group. His firm bought the 907,237-square-foot former Winn Dixie bulk distribution facility in Sarasota in 2006 and converted the single-tenant property into the Meridian Distribution Center, which has multiple tenants. Kossoff, who unsuccessfully attempted to buy the Kash n' Karry complex, says Agellan will need to improve the building's antiquated refrigeration space, add parking and give the building a more modern look.

“The tenants this will likely serve will be local and regional companies,” he says. “The companies that need higher clear space will most likely look to more modern 36-foot clear space in Lakeland. They have a lot of work to do. But it should do fine.”

Edward Miller, managing director of industrial services for Colliers International, says buying a fixer-upper property like the former Kash n' Karry, even for below replacement cost, is predicated on rent increases for food distribution space. “We are in a time period when everything with an income stream is attractive to a lot of people, who are buying based on the expectation that the market is improving,” he says. “Things are so much better than they've been. I think it's reasonable to expect rent growth.”

For the near future, CBRE seeks to lease two main vacant spaces: 117,000 square feet of dry space and 64,000 square feet of cold storage.

The demand for food-storage distribution space is strong, Rettig says. The group, for example, sold the 836,771-square-foot Sweetbay Distribution Center and Truck Maintenance building in Plant City last year to C&S Wholesale Grocers for $28 million. “The population is growing,” he says. “People need to eat and that needs to be stored.”


Latest News


Special Offer: Only $1 Per Week For 1 Year!

Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.
Join thousands of executives who rely on us for insights spanning Tampa Bay to Naples.