Acquisition
ViaWest is experienced in acquiring and owning the following property types:
- Industrial: Multi-tenant, single-tenant, general industrial, flex-office, warehouse.
- Office: Multi-tenant Class A and Class B properties.
- Multi-family: Rental apartments and condominium conversions.
- Land: Raw unentitled land and zoned land for parcel sales or ground-up development.
Since each of these property types has a distinct cycle, ViaWest proactively seeks investment opportunities in the context of current fundamentals, market outlook, and the dynamics of the cycle.
Sample Investment:
5110 N. 40th St. Office building acquisition, Phoenix, Arizona.
An example of an acquisition characteristic of our thesis-driven strategy is on 5110 N. 40th Street, in Northbank Office Park in Phoenix, Arizona. 5110 is a Class-B office building in a location that we believe would be increasingly included as part of Phoenix’s Camelback Corridor, which is widely regarded as the premier office corridor in Metropolitan Phoenix. ViaWest continues to own the property. Recently signed leases with new tenants are at significantly higher rents than at the time of purchase.
- Rents likely to increase: We believed the supply and demand dynamics were quickly going to lead to increased rents in the supply-constrained Camelback Corridor, as vacancy rates continue to shrink.
- High barriers to entry for new supply: The Camelback Corridor is supply constrained, as there are essentially no sites on which new office buildings could be built unless an existing building were torn down, in which case the rents would need to be much higher.
- Underappreciated address: We believed that the particular address of 5110 was underappreciated by the market at the time, but would not be going forward. In late 2005, investors and tenants were primarily focused on Camelback addresses and ignoring the natural results of increased rental rates and sale prices that Camelback Road properties would have on just off-Camelback properties. We believed there would be similar increases in off-Camelback properties as the trophy properties were no longer available.
- Priced significantly below replacement cost: At $138 per square foot, the purchase price for 5110 was significantly below market. This pricing dislocation was primarily driven by the requirement to assume the existing debt at an above-market rate and below optimal leverage. We believed there was enough cushion in the pricing and rent growth potential to justify assuming the existing debt.
There were several layers to our investment thesis in 5110: