New York based APF Properties strikes gold in Philadelphia.PHILADELPHIA, PA: Making its first buy in the Philadelphia market, APF APF, n the abbreviation for acidulated phosphate fluoride. Properties uncovered a gem of an investment opportunity--and has quickly turned it into a veritable gold mine for its investors. The New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of City-based investor acquired 500 Virginia Drive, a 366,696 s/f Class A office building on a 28.3-acre site just off 1-276 in the affluent northwest Philadelphia Northwest Philadelphia is a section of the city of Philadelphia, Pennsylvania. The area is divided by Wissahickon Creek into two subsections. To the east are Germantown, Mount Airy and Chestnut Hill, and to the west are Roxborough and Manayunk, each contain their own groups of suburb of Ft. Washington. The seller was General Electric (GEL which had purchased the singlestory building in 1999, subsequently stripping the building to its shell and completely rebuilding it inside-and-out to high-end corporate standards for the use of its insurance subsidiary. After divesting itself of this business, GE reduced the space it occupied in the building and put the remainder on the market for lease. By early 2007, GE listed it with the Philadelphia office of Cushman & Wakefield, which in turn kicked off a search for potential buyers. At the time of sale, the single-story building was 82% occupied by a bluechip tenant roster comprised of Honeywell, GE nd Chase Manhattan Mortgage. APF Properties beat out several other suitors, putting the property under contract at just under $36 million. A less-than-S97 psf purchase price in a market where new office construction easily runs more than $175 psf made 500 Virginia Drive one very hot commodity among the equity investors APF Properties solicited to join in the deal. "We sent out the investment memorandum to a number of potential investors--and within 24 hours the deal was completely sold out," said APF Properties Principal Berndt Perl. In its offering, APF Properties projected that through renting out vacant office space and reducing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. by eliminating redundancies it could increase the building's net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ) by one third from its current $2.4 million annually to $3.2 million as early as 2009. Using a 6% cap rate that would equate to an increase in value of over $13 million. With GE's permission, APF Properties began a search for tenants to occupy 500 Virginia Drive's remaining vacant space. The effort bore fruit. "We were advised that cellular service provider MetroPCS was searching for space in the area. We zeroed in on this tenant and made certain that 500 Virginia Drive would house its new offices," recalled APF Properties principal, Kenneth Aschendorf. Metro PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. signed a lease for just over 32,000 s/f-bringing occupancy to 92% and pumping up the income stream by a half million annually. By reconfiguring the building's cafeteria, office and common-area space, APF is "creating" some 11,000 s/f of newly rentable windowed Win´dowed a. 1. Having windows or openings. office space. The combination of increased income from new tenants, miscellaneous cost-cutting measures associated with transforming a corporate owner-occupied facility into a professionally-managed and leased building should bump annual NOI up to the $3.3 million mark and APF Properties hopes to achieve all of this within a year. APF Properties closed on debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay prior to the recent run-up in long-term interest rates and was able to finance 88% of the purchase price at a fixed rate of 5.8%. |
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