Red tape flies as Tanenbaum buys
Red tape flew when an investor group l ed by Oklahoma City developer Richard Tanenbaum paid $106.5 million for 42 buidings leased by the federal government in a portfolio purchase adding to its reputation as “one of the most active buyers of federally leased product in the country.”
Tan en ba um Equity Partners, a subsidiary of Gardner Tan en ba um, bought the properties, in 11 states, from CoreCivic Inc. in Brentwood, Tennessee. The space totals 573,000 square feet leased under the federal General Services Administration Tanenbaum to agencies
including the Social Security Administration, Department of Homeland Security, Veterans
Administration and others. Most were built for government use.
The acquisition gives TEP 105 federally leased properties, and the investors are looking for more to buy, said Tan en ba um, founder and managing partner.
The red tape? He said is was a complex transaction involving a transitioning real estate investment trust, 17 underway construction projects, and de coupling 24 of the buildings from commercial mortgage backed securities.
“The sellers needed to close by year-end 2020 to meet certain tax benefits of converting from a REIT to a corporation,” Tanenbaum said. “TEP closed this portfolio within 35 days from the date we went under contract. This was no easy feat given the multifaceted nature of the package and current market environment due to the pandemic.”
TEP was represented in the transaction by both The Ficke Team of Colliers International as investment sales representatives, and Marcus & Millichap Capital Corp. as financing intermediary and adviser. Marcus & Millichap's Sunny Sajnani, Todd McNeill and Brandon Wilhite secured acquisition financing from Arkansasbased Centennial Bank, including a senior loan structured as a fixedrate bridge facility plus a line of credit for capital and tenant improvement projects.
“The complexity of this
acquisition and the various construction projects currently ongoing and planned over the next 12-18 months required a lot of creativity and structuring from a financing standpoint to achieve the short and longterm goals of TEP,” Sajnani said.
It was the second portfolio deal Colliers International has worked with Tanenbaum in the past 18 months, said Geoff Ficke, executive vice president.
“Just last year TE P purchased a 13-property national GSA portfolio we were marketing primarily in Michigan, Ohio and Florida. They are without a doubt one of the most active buyers of federally leased product in the country and we are very pleased to have represented them in such a momentous transaction.”