Covington Capital Sells Indy Warehouse Facility, Plans Opportunistic Strategy in 2008

Capital Corp. has made a quick move, and a neat profit; it has sold its Rockville Business Center. Covington Capital, based in Santa Monica, Calif., and Columbus, Ohio, acquired the center, a 630,000-square-foot former RCA manufacturing facility in Indianapolis in Sept. 2005. The building was bought out of bankruptcy from GMAC, and Covington spent about $3.8 million to redevelop the property, almost 70 percent vacant at the time, into a multi-tenant bulk warehouse by reconfiguring interior spaces, adding dock doors, and remodeling the office spaces and the exterior. Covington pushed leasing up to 97 percent and has now closed on the sale of the building to Equity Industrial Partners Corp., Needham, Mass., Both parties were represented by Mark Writt of CB Richard Ellis Inc. This was a typical Covington transaction; the $16 million deal. But it is also part of the cash-heavy firms larger plans for 2008, director of acquisitions Mike Skunda told CPN, Although the company’s primary focus is still industrial properties, Covington is also on the lookout for “opportunistic land purchases” and other opportunities in a changing real estate environment. So no surprise that it would take its profit and be in a position to buy more.In late 2007, for example, in conjunction with the Forest City Land Group, Covington acquired from Standard Pacific Homes more than 2,500 home sites in 14 development projects or existing subdivisions in San Antonio. The company reports that the deal took less than three weeks from initial discussions till closing. “We have the ability to complete due diligence rapidly,” Skunda said, partly because the company funds such transactions with its own cash, drawn from its long-time network of high–net worth individuals. “We buy across the country,” in both major and secondary markets, Skunda said, especially in active distribution markets, including Indianapolis, Ohio, Connecticut and the Carolinas. For example, he said, Covington is “close to an acquisition” on an industrial property in South Carolina’s I-85 corridor and expects to make an announcement in about 30 days. In addition, the company is developing the Caliente Road Industrial Buildings, in Hesperia, Calif., in Southern California’s High Desert Region. The two buildings, totaling about 900,000 square feet, are scheduled to be completed in 2009. “The tightening of the credit markets,” Skunda concluded, “will create opportunity for us.”