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SALE-LEASEBACK
From Site Selection magazine, May 2018
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The Multi-City Approach

Sale-leaseback works for strategies being implemented by State Farm and BlueLinx.

SALE-LEASEBACK
Transwestern’s acquisition of the Park I complex in Atlanta was one of three major sale-leaseback transactions with State Farm over the past two years.
by ADAM BRUNS

Two sale-leaseback announcements in the past six months have spotlighted the multi-site approach for two major corporations. In February, Brennan Investment Group completed a four-building sale-leaseback transaction for building and industrial products distributor BlueLinx Corp. sites in Boston, Raleigh-Durham, Atlanta and Washington, D.C.

In December, Houston-based Transwestern Investment Group (TIG) announced it had closed on the third and final sale-leaseback transaction with Bloomington, Illinois–based State Farm Mutual Automobile Insurance Company as part of a business strategy developed years ago.

"Corporate Properties Trust III LP, a partnership between TIG and JDM Partners LLC, acquired Marina Heights, a five-building, LEED-certified office campus spanning 20 acres with ground-floor retail, restaurants and other amenities at 300 – 600 Rio Salado Parkway in Tempe," Transwestern announced. The 2-million-sq.-ft. transaction was similar to two others that took place over the previous 18 months: the acquisitions of the 2.2-million-sq.-ft. State Farm campus in the CityLine project in Richardson, Texas (Dallas), in fall 2016 and the 591,000-sq.-ft. State Farm campus in Atlanta during summer 2017.

"The closing of the Tempe transaction, the third in a series including Dallas and Atlanta, signals the execution of a strategy State Farm designed as a priority several years ago," said Larry P. Heard, CEO of the Transwestern family of companies, which has worked with State Farm for more than 35 years. TIG believes the sale-leaseback structure has benefited both parties with steady cash flows generated from the long-term lease with State Farm and stable, long-term ownership and management for the tenants.


"The closing of the Tempe transaction, the third in a series including Dallas and Atlanta, signals the execution of a strategy State Farm designed as a priority several years ago."
— Larry P. Heard, CEO, Transwestern

"Marina Heights is a world-class project to add to our portfolio," said Charles Hazen, president of Transwestern Investment Group. JDM consists of the principals Jerry Colangelo (best known as the owner of Phoenix-area sports teams) David Eaton and Mel Shultz. 

Marina Heights is located between Arizona State University and Tempe Town Lake, near Loop 202 and Phoenix Sky International Airport. The development will be a future stop for the Tempe Streetcar, directly connecting the campus to the airport, downtown and central Phoenix, as well as west Mesa via the Valley Metro Light Rail.

Similarly, the Park Center I complex State Farm is occupying in Atlanta that was acquired by TIG in May 2017 is a LEED-certified office tower situated on a seven-level parking structure with ground-floor retail adjacent to I-285 and to the Dunwoody MARTA rail transit station. State Farm employees began moving into the new building in fourth quarter 2016.

The three new leased-back sites are major elements of State Farm's plan, announced last May, to exit eleven facilities in stages over the course of several years, beginning in 2018. "The work from these facilities will move to the company's headquarters in Bloomington, Illinois, its offices in Atlanta, Dallas, and Phoenix, as well as a number of existing locations across the U.S.," said the company. State Farm intends to exit the following locations according to the projected timeline below:

2018
Parsippany, New Jersey

2019
Kalamazoo, Michigan

2020
Indianapolis, Indiana

2021
Bakersfield, California
Petaluma, California
Irvine, California
Medley, Florida
Frederick, Maryland
Tulsa, Oklahoma
Downers Grove, Illinois
West Lafayette, Indiana

"These changes will affect approximately 4,200 of the company's nearly 70,000 employees. These employees will continue to have job opportunities in other State Farm locations," said State Farm, stating that its decision to exit the facilities was based on "efforts to best serve customers by gaining efficiency through streamlining and improving processes, leveraging technology, and concentrating employees in larger locations."

Adam Bruns
Managing Editor of Site Selection magazine

Adam Bruns

Adam Bruns has served as managing editor of Site Selection magazine since February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.

   




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