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Partial view of the Resource Square I and III office buildings within Orlando's Central Florida Research Park.
Partial view of the Resource Square I and III office buildings within Orlando's Central Florida Research Park. (HFF)

An affiliate of Estero-based real estate investment group TerraCap Management paid $39.19 million last week for two office buildings next to the University of Central Florida, and is looking for more as it raises a fourth fund.

Located at 13501 Ingenuity Drive and 12001 Research Parkway in Orlando's Central Florida Research Park, the two Class A buildings -- known as Resource Square I and III -- total 244,549 square feet.

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The three- and five-story buildings were near 85 percent occupancy at time of sale, with tenants that include General Dynamics, AVNET, Cisco Systems and Raytheon, according to HFF, which represented the seller and procured the buyer.

Insight on what led Disney to buy a 17-year-old office building on Celebration Place. 

"Orlando is leading the nation in a lot of growth metrics. We like the long-term growth aspects of this property and the yield in place for the buildings," Director of Acquisitions Steve Good told GrowthSpotter. "We don't have a heavy presence in Orlando right now, but we're hoping to change that."

TerraCap is a value-add private equity fund manager which typically holds assets for three to six years, improves cash flow and then sells for a profit.

The company sold some of its local holdings in recent years, and currently owns one other 75,000-square-foot office building in Lake Mary. Across the southeastern United States it owns more than 3.5 million square feet of office, multifamily and hotel properties.

For the Resource Square I and III buildings, TerraCap saw value-add opportunity in a tightening market for the Central Florida Research Park, where tenant demand is growing and new construction is limited, Good said. CBRE has been hired to market the remaining space for lease.

TerraCap is currently on its fourth private equity fund, with about half of the target $300 million raised, $120 million of that called, and another 11 months ahead to raise capital before the fund closes in April 2019, Good said.

Looking forward, the company is pursuing office, hotel and multifamily assets in Central Florida that are yield-producing and have a value-add component, Good said. TerraCap currently has a 220-unit apartment complex in Atlanta under contract, he added.

In March, the company sold a Class A office building in Celebration to Walt Disney Company for $21.8 million.

Since then, TerraCap has also sold one of downtown Sarasota's tallest office buildings on May 1, turning a $4.85 million profit over four years, and in mid-May sold the single-tenant Lakeview Center in Tampa for $21.8 million, according to TerraCap's website.

The seller near UCF was an affiliate of Banyan Street Capital and funds managed by Oaktree Capital Management, which previously paid a combined $29 million in November 2014 for the two buildings.

Have a tip about Central Florida development? Contact me at bmoser@growthspotter.com, (407) 420-5685 or @bobmoser333. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.

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