Heritage Capital Aquires Three-Building KB TOYS Portofilo 2.2 MSF in Three States Part of $100 Million JV with Barrow and Greenfield

RIDGEWOOD , N.J. Oct 01, 2007

Heritage Capital Group, LLC has acquired three distribution centers from KB Toys. The firm joined with equity partners Barrow Street Capital, LLC and Greenfield Partners, LLC in the $77.5 million investment.

Totaling 2.2 million square feet, the properties are located in Clinton, N.J. (730,000 square feet); Glendale, Ariz. (620,000 square feet); and Montgomery, Ala. (840,000 square feet). KB Toys has leased back the entire portfolio for six months. Thereafter, KB will remain in 480,000 square feet at the New Jersey building and 375,000 square feet at the Arizona property. The Alabama property will be vacated.

"This portfolio is a terrific investment for us, with three outstanding properties and the opportunity to create significant value by leasing up the vacant space when it comes online," noted Jeffrey Greenberg, the Heritage Capital Group principal who spearheaded the acquisition. "We are especially excited about partnering with Barrow Street and Greenfield for the first time. We are a strong match in terms of chemistry and our shared outlook on real estate."

Locations Offer Distinct Opportunities

According to Steven Greenberg, also a Heritage Capital Group principal, the locations of the three properties contributed significantly to their investment appeal. "The Clinton property is located just off I-78, midway between Philadelphia and the Port of Newark," he noted. "The Glendale distribution market is known as one of the strongest in the Southwest. And the Montgomery property sits in the heart of an up-and-coming automotive industry hub, just two miles from a brand-new Hyundai plant. All of the sites are well-positioned to attract desirable tenants."

Tom Consiglio of Resource Realty represented KB Toys in negotiating the sale, while Jon Mikula of HFF secured debt financing through Capmark Financial Group and together with HFF Securities arranged the equity partnership on behalf of Heritage Capital Group.

"This purchase is a great example of Heritage uncovering off-market, value-add opportunities that play to the firm’s strengths in leasing, expense cutting and cap rate arbitrage," Mikula commented. "With the capital markets recent shift in risk pricing, this acquisition strategy plays well with those equity and debt providers that are aggressively seeking access to well-positioned operators and real estate. The fact that the KB Toys purchase closed in the midst of the current credit crisis confirms the sound fundamentals of this investment."

"KB Toys recognized that it had over capacity in their distribution network and tremendous value in its real estate," said Consiglio. "We studied many alternatives to unlock that value, and the sale with a partial sale lease-back gives KB the opportunity to capture that value while creating operating efficiencies."

In June, Heritage Capital Group purchased Plaza Nine, a 112,568-square-foot, Class A office property in Woodbridge, N.J. That $22 million acquisition represented the inaugural purchase by the newly established investment entity. The asset has since become part of the Barrow/Greenfield joint venture with Heritage, which is valued at more than $100 million.

Press Info

Heritage Capital Group, LLC
Post Office Box 627 123 Prospect Street, Ridgewood, NJ 07451
P: 201.251.9700 F: 201.251.9009 press@heritagemgmt.com