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Getting Met

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  • | 11:00 a.m. November 6, 2015
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While institutional investors regularly sell commercial real estate properties to redeploy capital or maximize profits in hot markets, MetLife Real Estate Investors has differentiated itself through the volume — and types — of assets it's parted with this year in the Tampa area.

Its biggest asset sale to date, however, involving a signature 42-story downtown Tampa tower, is likely just over the horizon.

“Every investment has a life, so to speak, and in the case of MetLife, they've owned their assets here for many years,” says Mike Davis, executive director of capital markets — investment sales and acquisitions for commercial brokerage firm Cushman & Wakefield. “So this is fairly typical of institutional owners as they go about positioning assets for sale.”
MetLife, one of the nation's largest real estate lenders and owners with more than $65 billion in assets as of June 30, kicked off its regional selling spree in August, when it unloaded the Tampa Distribution Center for $43.4 million.

In that deal MetLife sold the 955,000-square-foot property, at 1212 N. 50th St. near the Lee Roy Selmon Expressway, to High Street Realty and Grosvenor Fund Management Inc. after decades of ownership.

At the time, the sale was the largest single-site industrial deal in the Tampa area in more than five years.

And in late September, it sold the seven-building Center Point Business Center, on North U.S. 301 in Tampa, to a Boca Raton firm for about $20 million, according to Hillsborough County property records.

That was roughly double the amount MetLife paid for the property in April 1992, records indicate.

“We liked the price, the property's story, the location,” says John Procacci, founding partner and chief investment officer of IP Capital Parnters, in Boca Raton, of the firm's purchase. “And we're also taking advantage of the macroeconomic fundamentals in the Tampa market. It's just solid real estate principles of investing.”

MetLife officials in New York and the company's Southeast regional office, in Atlanta, did not return calls for comment.

At least part of MetLife's motivation to sell, however, coincides with market timing and a desire to diversify geographically.

Industrial properties, hospitality projects, apartment complexes and even some downtown office towers are trading at record prices in Tampa and elsewhere, prompting many buyers with capital to dive in.

In MetLife's case, many of the assets it sold this year also were brought to market in 2011, just as the economic recovery in Florida was taking hold. Officials were apparently unable to obtain the yields they felt Tampa Distribution Center, Center Point and other properties could generate.

“I think they're probably just trying to maximize their returns, and they've looked at the current market and they understand where the values are today,” says Rian Smith, a first vice president at CBRE in Tampa.

“Many institutional investors are doing the same thing, given the economy and resurgence with Tampa, in particular,” he adds. “The thinking is right, especially if they have a plan for where to reallocate the capital from sales.”

Davis points out, too, that many large institutional investors often have investment criteria mandating they sell an asset when a pro forma yield is achieved.

“The name of the game for them is to raise capital and deploy capital,” Davis says. “So when they hit their target for return on an asset, they generally sell it, even if they could conceivably achieve a greater yield by holding it for a while longer.”

And MetLife's biggest sale to date in the region could be ahead of it. That's the Bank of America Plaza, a 42-story downtown skyscraper built in 1986. It could sell for at least $170 million, based on comparable recent Class A office tower sales.

And when Highwoods Properties bought SunTrust Financial Centre in downtown Tampa in September, it paid $124 million, or $234 per square foot. If the 784,000-square-foot Bank of America building sells for a comparable amount, the price would be $183 million.

The tower, which Hillsborough County values at $110.7 million, is currently 89% occupied. Tenants include Bank of America, Lockheed Martin, Allstate and CBRE.

Officials at CBRE, which is marketing the property, declined to comment on a potential sale. But others believe MetLife's timing is right.

“Now is a good time for them to sell,” Davis says. “There's a lot of interest in downtown Tampa, and several other signature properties have sold in the past year or so.”

- K.L. McQuaid


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