May 15, 2017

Marginal Way purchase reflects strong value trends

Northland Enterprises LLC purchased 63 Marginal Way, Portland, seen here outlined in yellow, as an investment asset that diversifies its portfolio in West Bayside.

Northland had another notable recent deal

Northland Enterprises' recent activities also include joining in a unique sale arrangement for the Portland Elks Lodge — a 23,090-square-foot building on 6.9 acres — at 1945 Congress St., not far from Unum offices and the Portland International Jetport. Northland and a doctor's group, the latter going by the name Diversified Partners LLC, purchased portions of the property from Portland Lodge No. 188 BPOE of USA, for $1.25 million.

Mark Malone of Malone Commercial Brokers represented the Elks Lodge and Greg Boulos of CBRE/The Boulos Co. represented the buyers in the transaction, which closed April 20.

Northland will redevelop the property, reducing and modernizing the Elks' building to 13,500 square feet for the Elks' continued ownership; building a 20,000-square-foot medical office building for the doctor's group; and building a 25,000-square-foot building to be owned by Northland and leased to Clark Insurance. The doctor's group and Clark Insurance currently operate elsewhere on Congress Street. The condominium set-up will provide purpose-built offices and better visibility and parking, said Benthien.

All together, the project is expected to cost about $11 million, including the purchase price.

PORTLAND — Northland Enterprises LLC's purchase of 63 Marginal Way in Portland isn't the commercial real estate development company's typical kind of acquisition.

Partners Josh Benthien and Rex Bell typically seek out value-add redevelopments, such as their rehabilitation at 45 Marginal Way (now renamed 29 Marginal Way), a former Century Tire store that was transformed into the Century Plaza retail center.

Also in the West Bayside neighborhood, they own 1 Marginal Way, 200 Kennebec St. and 202 Kennebec St. (Elsewhere in Portland, they are redeveloping the 93-year-old Clapp Memorial Building, at 443 Congress St., with 28 apartments expected by January 2018.)

The 63 Marginal Way property comprises a 27,740-square-foot four-story office building, built in 2006, a lobby, drive-up with canopy and a parking lot on 0.43 acre. The location is convenient to Interstate 295 and downtown Portland and has visibility for businesses requiring street-level offices. It's fully occupied by tenants with long-term leases or options to renew.

"It's a nice complement to what we're doing at Century Plaza and what we hope to do at 1 Marginal Way, and it diversifies the asset types in our portfolio," said Benthien.

The $5.4 million deal closed March 29 and was brokered by Charles Day and Joe Porta of CBRE | The Boulos Co. The seller was Portland real estate developer Ted West.

West is the developer/owner of several real estate projects in the Bayside neighborhood, including 68 Marginal Way (anchored by AAA Northern New England) and 84 Marginal Way (anchored by InterMed), along with 63 Marginal Way. He was the previous owner of 45 Marginal Way, 1 Marginal Way, 200 Kennebec St. and 202 Kennebec St. before selling them in 2015 to Benthien and Bell.

Day, who represented West, called it a great investment for the buyers.

"The price trends and value are extremely strong," Day said of the neighborhood. "There's a lot of demand down there. I'd call this one of the signature Class A office investment properties in Portland."

Deal was a long time in the making

The property was originally part of the package that included the other four properties Benthien and Bell acquired from West.

"The plan was to acquire all of them at the same time," said Benthien who, with Bell, worked with both West and his associate Jim Hanley. "As we got close to closing, we realized it was probably best if we delayed the acquisition of 63 Marginal Way because, for several reasons, it became apparent that it would be advantageous for both sides to wait a little bit. The sellers were generously willing to let us buy an option to purchase 63 Marginal Way at a later time. We've really developed a close relationship with them and feel like it's a team, where we're working together to do projects that are beneficial to Bayside."

Current tenants are Gorham Savings Bank, AAA Northern New England Insurance, Winxnet and Guaranteed Rate.

"So there's no immediate change in terms of tenancy or redeveloping the property at all," said Benthien. "Long-term, the Marginal Way office corridor, I think, will have some competitive advantages in terms of ease of access to I-295 and on-site parking. Our plan is for 63 Marginal to be a long-term hold for us. Another nice thing about the building is that the first floor was once a credit union bank branch, and there's a drive-through that isn't being used, so at some point it's possible it may again be home to a bank branch."

Benthien said he and Bell appreciate the opportunity that owning a property like this offers in steady returns.

"Buying a stabilized building has pluses and minuses," he said. "You're capping your upside because you've got leases in place. It doesn't present the opportunity for a home run, which redevelopment can — but there's associated risk with [redevelopment]. This is a comparatively low-risk, stable property that's providing commensurate returns with the risk."


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