AFF Logistics Center Sale-Leaseback
OVERVIEW
- 7400 45th Street Court E | Fife, WA
- ± 99,260 SF
- 19.5 Acres
- Seller (& Lessee) Representation
- Sale Price: $46,515,015 ($469 / SF)
“We were extremely happy with the local market expertise and guidance provided by the Lee & Associates team. From lease availability analyses, to purchase and sale negotiation, introduction to key area legal counsel, and presence during the entire transaction, we could not have asked for more. The Lee team set up our lease-back to maximize exit value and achieved closing under a tight timeline.”
- Senior Director, Corporate Operations, AFF
The Client
American Fast Freight, Inc. (AFF) is a transportation and logistics company, providing a wide range of ocean freight consolidating and freight forwarding, trucking, project logistics and warehousing-distribution services. Since 1988, AFF has grown from a Fife-based freight forwarder serving Alaska, to one of the top logistics and transportation names in the industry, operating a number of container freight terminals throughout the continental United States, including Seattle and Tacoma, WA and Oakland and Long Beach, CA; and Alaska, Hawaii, Florida, Puerto Rico, and Guam. American Fast Freight, Inc. (AFF) is an affiliate of Odyssey Logistics & Technology Corporation, a privately-owned company headquartered in Danbury, CT, which specializes in diverse and complex transportation and logistics services.
The Challenge
When Odyssey Logistics & Technology Corporation, a global leader in complex logistics and technology solutions, acquired American Fast Freight, a specialized freight forwarder headquartered in Fife, Washington, the purchase included ownership of multiple transportation facilities throughout key west coast gateway markets. Included was a “trophy” industrial asset adjacent to the Port of Tacoma in Fife, WA, comprised of a state-of-the-art hybrid cross-dock terminal of approximately 100,000 square feet on 20 acres of paved, secured trailer parking yard area. Odyssey was not in the business of owning real estate, and originally approached the Lee & Associates NW (L&A) listing team for help analyzing their alternatives, including whether they should sell the property vacant and potentially relocate the operations elsewhere, consolidating as a tenant within the market to another facility. With their deep market knowledge and experience, the L&A team knew that this specialized facility was irreplaceable and that a relocation property would be nearly impossible to find in the market. A build-to-suit would be equally as difficult to execute and prohibitedly more expensive due to the scarcity of developable infill industrial land and related costs. Furthermore, the L&A team knew that Odyssey would be leaving a significant amount of value on the table if they took this route of selling the property to a user, or selling essentially vacant to an investor. Valuations by other brokerage firms had indicated a value range of only $18 to $26 million for the property.
Our Approach
Our Lee & Associates team provided detailed reports and financial analysis to make the case internally that the best course of action for the company would be a to conduct a sale-leaseback transaction, whereby the asset would be monetized at favorable market conditions, allowing the operating company to retain occupancy of the mission-critical property. We worked closely with various departments within the organization to best position the asset for sale, making the lease marketable to institutional investors, maximizing the sales proceeds, while still providing the long-term security the company required. Once engaged, the L&A team had a tight deadline with the end of the year fast approaching. By closing the transaction prior by year-end, the seller would save nearly $1 million in additional real estate excise (sale) tax. The team assembled marketing materials and preliminary due diligence materials quickly for expedited review by prospective buyers. By marketing the asset broadly to institutional investors throughout the world, following with direct outreach to the most likely buyers, the team garnered heavy interest in a condensed time period that drove the price higher than expected.
The Outcome
Ultimately, despite some expected road bumps, the L&A team successfully guided the transaction to closing on-time and as-planned for $46.5 million. The L&A team effectively created over $20 million of additional value (compared to the highest valuation provided by Odyssey and other brokerage firms) via the recommended deal structure and aggressive terms, and L&A assisted in saving the client an additional nearly $1 million in sales tax savings by completing the transaction in a very condensed time period.