Two office buildings by the University of Central Florida sell for $50M

Estero-based TerraCap Management just sold an office portfolio totaling more than 245,000 square feet by the University of Central Florida.

The buyer is a joint venture between Boca Raton-based Crocker Partners and Los Angeles-based Pacific Coast Capital Partners. The deal for the two-building office portfolio breaks down to about $205 per square foot.

According to deeds recently filed in Orange County, the partners paid $17.85 million for the three-story, 91,890-square-foot Resource Square One building at 13501 Ingenuity Dr., and $32.55 million for the five-story, 153,221-square-foot Resource Square Three office building at 12001 Research Parkway.

In total, the Resource Square One, built in 1999, and Resource Square Three, built in 2003, sold for $50.4 million. Both buildings feature onsite property management, fitness centers with showers and a parking ratio of five spaces per every 1,000 square feet.

Terrcap acquired the buildings in May 2018 for $39.2 million — meaning the price for the portfolio increased by about 28 percent in 20 months.

Stephen Hagenbuckle, a managing partner at TerraCap, told GrowthSpotter the firm was able to push occupancy rates up from 83 percent to 100 percent and moved annual lease rates from slightly below $25 per square foot to about $30 per square foot.

“That had a major impact to the net operating income,” Hagenbuckle said. “The long-term value of the leases increased and that provides a better long-term yield and stabilized investment for the next buyer.”

The JLL Capital Markets team, led by Ike Ojala, Hermen Rodriguez, Robbie McEwan and Matt McCormack, represented both sides of the deal.

Both office buildings traded fully leased with a tenant roster that includes General Dynamics, AVNET and Raytheon.

Records show the buyers sourced $37.57 million in financing from Synovus Bank. JLL’s Maxx Carney and Reid Carleton helped the buyer secure a seven-year, floating-rate acquisition loan with the bank.

TerraCap is a private equity fund manager that specializes in value-add properties. The firm typically holds onto an asset for about three to six years, while improving its cash flow, before selling it for a profit.

Crocker Partners is also a value-add investor.

Through 2014 to 2017, the company spent about $807 million buying office assets, eventually earning the title of Florida’s largest office landlord, according to its website.

Nationwide, the firm operates approximately 11 million square feet of office space. The most recent acquisition brings its total assets under management in Central Florida to almost one million square feet.

It would have had more, but last year the company sold a five-building, 404,600-square-foot office portfolio nearby in Orlando’s Quadrangle Business Park to IP Capital Partners for about $67.35 million.

The Quadrangle Business Park and the Central Florida Research Park have long established themselves as hubs for defense and technology companies.

Other real estate companies active in the area include Real Capital Solutions, which bought a 226,548-square-foot office building fully occupied by Siemens Energy, Inc. for $53.73 million last year.

Nearby, GrayPointe Capital is developing a built-to-suit 95,000-square-foot office complex, dubbed Innovation Commons.

Have a tip about Central Florida development? Contact me at arabines@GrowthSpotter.com or (407) 420-5427, or tweet me at @amanda_rabines. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.