HFF Arranges $56M Funding for $80M SFO Logistics Center Buy, Development

Centrum Properties Inc. and Angelo, Gordon & Co. have secured $56.3 million in financing to acquire and reposition the SFO Logistics Center, a 572,000-square-foot warehouse-distribution center and adjacent 5.2-acre land parcel in south San Francisco that had been owned by the federal government for decades. An HFF executive who arranged the financing told CPN today the entire deal is worth $80 million.Peter Smyslowski, managing d irector in the San Francisco office of Holliday Fenoglio Fowler, L.P., said the 25-acre property near the San Francisco International Airport had been owned by the GSA and used as a government services distribution center since the 1950s. The site was recently purchased through a government auction that attracted numerous bidders, he said. “It’s a very, very unusual piece of real estate infill,” he said. “You just don’t see this size (property in the Bay Area).”The distribution center is located at 1070 San Mateo Ave. a quarter mile away from the airport. It is close to the intersection of Interstates 280 and 380 and The Bayshore Freeway in southern San Francisco. “The borrower realized an opportunity to take an existing asset with strong distribution qualities and an irreplaceable location, add immense value by merging the property with the adjacent site, which will greatly enhance the distribution and logistical qualities of the asset,” Smyslowski said.The two companies that acquired the site are proposing adding numerous loading slips and erecting 52,200 square feet of new buildings. It already has a 5.22-acre parking lot. “They are going to own and operate and lease to third-party tenants. They plan to improve the property, upgrade the facility and attract new tenants,” he said. “Currently there are a number of suites. It could be leased to multiple users or two users or one user.”Marshall Hydorn, a partner in NAI BT Commercial in Burlingame, Calif., who is one of the leasing agents for the property, said today the only tenant still on the site is the U.S. Postal Service. He did not know whether the USPS planned to stay. The listing on the NAI BT site notes there are 10 units available for leasing and a proposed 9,000-square-foot retail/service space in a new building to be constructed. He told CPN today that the space could eventually be used by a dry cleaner or restaurant but that there were no proposed tenants at this time. Smyslowski and HFF executive managing director Scott McMullen of HFF’s Los Angles office secured the 36-month, non-recourse, adjustable-rate loan through Capmark Finance Inc. The loan amount represents 70 percent of the total project capitalization and carries a risk20based of 3.25 percent over the 30-day LIBOR index, according to HFF. Smyslowski said it is “hard to get big deals done” in the current credit environment. He credited the fundamentals of the Bay Area market, the size of the property and the experience of the sponsorship. “They really were the keys to getting this deal done,” he said.Centrum Properties is a Chicago-based developer formed in 1980 that focuses on mixed-use, residential and commercial properties. Angelo, Gordon & Co. is based in New York City. It is a privately-held investment advisor that has invested in $5 billion in commercial real estate since it was founded in 1993. Smyslowski said the two firms have previously worked on industrial deals together.