Colorado-based investment management company Real Capital Solutions paid $22.29 million on Friday through an affiliate for two Class B office buildings in Maitland Center totaling 371,458 square feet, and wants to buy up to 1 million more square feet locally this year, the company's vice president of acquisitions told GrowthSpotter.
With a vacancy rate of 35 percent offering clear value-add opportunity, the company acquired the Park Center at 2500 Maitland Center Parkway (104,494 square feet) for $6.826 million, and the Maitland Forum at 2600 Lake Lucien Dr. (266,964 square feet) for $15.464 million. Both are located west of the Maitland Boulevard and Interstate 4 intersection.
"We really like the Orlando market and its long-term outlook, and found this acquisition opportunity substantially below replacement cost," said Adam Abeln of RCS, which now owns more than 2 million square feet of commercial space in Greater Orlando. "We'll be putting extensive capital into these two buildings, particularly the lobbies and some spec suites we'll do that will be ready for immediate move-in by tenants."
Real Capital Solutions sourced a loan on Friday of more than $23.28 million from Compass Bank in Denver. It has also retained Foundry Commercial as leasing agent for the two buildings.
The Maitland Center submarket is arguably the top value-add investment area within Greater Orlando's office market over the past year.
With more than 6.77 million square feet across 98 buildings, Maitland Center had a 10.2 percent vacancy rate at the end of the first quarter, on the higher end of 11 submarkets tracked by Cite Partners in its latest office market report.
But its average rental rate of $18.65 per square foot is in the lower half of those submarkets, and Maitland Center has led all in year-to-date absorption with 275,635 square feet, per the report.
"The timing is ripe to enter the office market for Maitland," Abeln said. "It has lagged the rest of Orlando's submarkets since the great recession, but last year it had the strongest leasing absorption of any submarket in the area."
Looking forward, RCS is targeting up to $350 million in new acquisitions this year nationwide, and Abeln's regional goal is to acquire another 500,000 to 1 million square feet in Greater Orlando by year's end.
That could be office, industrial or retail properties in submarkets with budding leasing growth, he said, and particular focus given to assets with substantial vacancy that are being mismanaged or require capital investment.
Both Maitland Center buildings were sold by affiliates of Miami-based Banyan Street Capital, which previously paid $10.295 million for the Park Center and $24.205 million for the Maitland Forum, respectively, in February 2012. CBRE Orlando's Ronald Rogg and Chip Wooten marketed the property for sale.
"These were some of the last assets in a long-held fund that we and an investment partner needed to sell as they liquidated the fund," Banyan's Lawrence Chapman, managing director of acquisitions, told GrowthSpotter on Monday. "We held a minority stake in these properties. Typically we go out and buy property with an investor holding 90 percent of the equity."
While that private partner won't be reinvesting their proceeds locally, Banyan will be looking in Greater Orlando to boost its profile as one of the largest commercial office property owners in Florida, Chapman said.
"We've historically been an opportunistic buyer, but we've been having more access to core-plus profile money, so our interest now runs the gamut from core plus to opportunistic," he said. "Orlando's market right now has occupancy rates that are strong, so we'll continue to look at more core-plus profile properties."
Banyan Street sold its five-building Primera Towers office complex in Lake Mary for $130 million last October to Miami-based Parmenter Realty Partners. The property totaled 771,826 square feet of Class A space.
After its sale on Friday, Banyan Street still owns three office buildings in a research park near UCF, totaling about 400,000 square feet on Ingenuity Drive.
Real Capital Solutions' purchase on Friday is the second acquisition in the last two months of buildings in the Maitland Center office park.
In late April, a joint venture of Vancouver-based Second City Real Estate and Orlando-based Tower Realty Partners, Inc., paid a combined $16.1 million for the 253,930-square-foot Winderley Place (555 Winderley Place) and the 314,925-square-foot Maitland 100 building (2300 Maitland Center Parkway).