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Indianapolis-based Scannell Properties’ bet on a building in Rogers has brought the company almost two times its initial investment.
An as-yet-undisclosed institutional buyer paid $20,425,000 for 13201 Wilfred Ln. N., a 19-year-old, 335,400-square-foot distribution center in a deal that closed on June 29. The purchase also includes enough land for a 141,000-square-foot expansion of the existing building.
Scannell owned the property for just over a year. In May 2017, the company paid $10.87 million to the then-owner for the building, which was empty at the time. The seller in that transaction was an limited liability corporation called RT Diamond Lake, an entity that shares an address with New York-based Gramercy Property Trust and lists its chief executive, Gordon Dugan, as manager.
Hennepin County records show that Scannell took out an $11.9 million mortgage on the property from Minneapolis’ Bremer Bank.
The short hold was intentional, said Judd Welliver, a broker with the capital markets team at CBRE’s Minneapolis office. Welliver and his colleagues Ryan Watts, Sonja Dusil and Tom Holtz represented Scannell during this latest transaction.
“Their intent was to buy it at a discount, fill it and then sell it,” Welliver said. “The valuation went up after it was fully leased.”
While the latest buyer paid almost $61 a square feet, Scannell paid about $32. At the time, the building had been vacant for more than two years, he said.
From 2007 to 2015, Walgreens ran a regional distribution center out of the structure, located along Interstate 94. The retailer announced in late 2014 that it would wind down operations there and move to another facility in Windsor, WI.
In March of this year, Scannell and CBRE announced that they had a lease in hand and the Wilfred Distribution Center would once again be fully leased, though they did not disclose who would occupy the building. The tenant was eventually revealed to be Atlanta-based Veritiv Corp., a business-to-business distributor of paper and packaging products and supply chain management company.
Welliver noted that Scannell invested in “significant” aesthetic upgrades for the incoming tenant. The center was last renovated in 2008.
The building has 32-foot clear ceilings, cross-docking and parking for 99 trailers and about 5 percent of the space is finished to office grade.
