Courtesy of CBRE |The Boulos Co.
A New York City-based real estate investor acquired 482 Congress St. in downtown Portland, paying $5.4 million.
PORTLAND — As often seems to be the case in the world of commercial real estate transactions, relationships proved key in a recent purchase in Portland.
Under the name Center Congress LLC, a New York City-based family that invests in and manages properties, purchased 482 Congress St. in Portland for $5.4 million. Joe Porta, representing the buyer, and Nate Stevens, representing the seller, both of CBRE|The Boulos Co., brokered the deal, which closed Nov. 22. The seller was a limited partnership called 482 Congress LP.
The 54,180-square-foot building comprises mostly office space. Tenants include the design firm Arcadis, Spectrum Medical Group, Educate Maine and HUD Gaming Lounge. Some are retail tenants at street level, others occupy offices above; some have been in there for decades, others are relatively new, said Stevens. It’s expected that all tenants will stay.
The New York City-based buyer’s first asset in Portland, a 40-unit apartment building, in 2013, was a deal that also was brought to them by Porta.
So how did New Yorkers, who otherwise have no other connection to Maine, land on property here?
“I connected with them through a mutual client,” said Porta. That acquaintance led to Porta’s assistance with the family’s 2013 search for suitable property to meet requirements of the IRS’ 1031 tax-deferred exchange program, based on an asset they sold in New York.
“We found the 40-unit apartment, and they liked Portland as a long-term hold,” he said. The family has witnessed Portland’s growth first-hand, he said, and waited for the right opportunity to acquire a second asset.
482 Congress St. proved to fit their acquisition criteria well, as its location, square footage and land area allow for modest value-add in the short term, and a long-term internal rate of return opportunity.
“So we pulled the trigger on it,” said Porta. “We liked the amount of real estate relative to the price. That’s the dynamic they were looking for. That way, over time, a small increase in [lease] revenue will result in a large increase in the value of the property. So this is a good hedge to them, in a good market, and close to New York.”
Seller’s rep Stevens called the building “a true unpolished gem in downtown Portland.”
The sellers were also out-of-state and, with this deal, have sold the last piece of their area portfolio, Stevens said.
The $5.4 million price tag was a considered a good deal in an extremely tight market, especially for downtown investment products of this size, said Stevens. At $100 per square foot, it sold for less than comparable recent sales in the area, where prices ranged from $110 to $112 per square foot, he said. That low price, however, comes with relatively low lease income, at least under the current lease agreements.
The property was on the market just a couple of weeks, said Stevens. “We received 10 offers, so there’s very high demand. Large investors, even local investors, see that there might be rising interest rates on the horizon, and are trying to get into the market.”
The structure is essentially two historic buildings seamlessly joined together: The back building, which has an entry on Center Street, was built in 1894, and the front likely shortly thereafter, said Stevens. The property is located in the heart of Portland's financial district and near the Old Port. Amenities include great water views from upper-floor suites, exposed brick and beams, large windows with natural light, professional property management and a common conference center.
The buyer plans to make an undisclosed investment in improving common areas and building aesthetics to provide an improved product to downtown’s office inventory, said Porta.
“Part of what I liked about the property is the 40-space parking lot that comes with it,” said Porta. It’s expected that the total package has potential for generating increased revenues in coming years, he said.
“We liked what we saw when we did the projections over a 10-year period,” Porta said. “When it went on the market, we knew what we were looking for and we jumped on it.”
Laurie Schreiber, who covers real estate for Mainebiz, can be reached at email@example.com