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  • Writer's pictureCapital Partners

Capital Partners’ industrial purchase is one of the largest ever

A joint venture between Minneapolis-based  Capital Partners  and New York-based DRA Advisors has paid nearly $100 million for a portfolio of industrial properties in the Midway in St. Paul.

The two investors bought 18 buildings in the former MSP Midway Industrial Park, according to the Twin Cities office of Colliers International and Capital Partners founding partner Peter Mork. The 1,851,165-square-foot portfolio consists of warehouse and office warehouse buildings. The park is just north of University Avenue and is less than a half-mile west of the Allianz Field soccer stadium.

The seller, New York-based Clarion Partners, purchased the bulk of the portfolio in 2000, according to CoStar and county property records.

Mork declined to give a price for the deal, but Colliers Senior Vice President Dave Berglund said the portfolio sold for just under $100 million. The square footage and the price make the purchase the richest and largest Capital Partners has invested in during the past two years.

The deal closed on Sept. 27. Certificates of real estate value for the sale were not publicly available as of Wednesday afternoon.

Clarion did not respond to a request to comment on the transaction. Berglund, who along with colleagues Colin Ryan and Mark Kolsrud represented Clarion, said the properties were the last in an older investment fund with the company.

“They felt that this was a good time,” he said of the sale in a Monday interview.

Colliers had marketed the portfolio throughout 2019 and received 14 bids, Berglund said. An earlier accepted offer fell through, he said, which led Clarion to accept a higher offer from Capital Partners and DRA.

The buyers had the portfolio under contract “for some time” before closing last week, Mork said in an interview. They plan to invest in some exterior improvements for the industrial park and will be changing the name to “Midway Mile,” he said. Capital Partners and DRA are also looking to add value to the portfolio by filling some vacancies. Overall, the industrial park has an 86% occupancy rate, he said.

Industrial and office space at 739 Vandalia St. and 2210 Territorial Road W. in St. Paul constitute two of the properties Capital Partners and DRA purchased as part of a nearly $100 million industrial portfolio. (Submitted photo: CoStar)

The location of the industrial park makes it attractive to tenants, Mork said.

“Given their excellent freeway access and proximity to downtown Minneapolis and St. Paul, they get strong appeal from local distributors, wholesalers and groups that want to save on transportation costs,” he said.

The buildings have a total of 27 tenants, Mork said, including Xerox, Northwest Respiratory Services, Trane, Midway Cold Storage, Murphy’s Rigging and Erecting and O’Reilley Auto Parts, according to CoStar.

Capital Partners now has an ownership stake in about 7.5 million square feet of Twin Cities industrial real estate, Mork said. Other recent portfolio deals the company has made include:

The Greenfield Industrial Portfolio, in June 2018 in which Capital Partners and Investcorp International paid $58 million for nine buildings totaling 990,879 square feet of space. The Tryperion Logistics Portfolio, in January 2018 in which Capital Partners and Investcorp paid $50.8 million for 11 buildings totaling 833,193 square feet of space.

The MSP Industrial portfolio is likely one of the largest industrial transactions ever in the Twin Cities, Berglund said. His office handled the record holder, a $227 million deal in April in which a Chicago-based Blackstone Real Estate Investment Trust paid cash for 34 properties throughout the Twin Cities.

What Capital Partners and DRA bought

The former MSP Midway Industrial Park portfolio includes 18 buildings among the addresses below:

1860 Minnehaha Ave. W.: 12,416 square feet, built in 1923. No vacancy. 1876 Minnehaha Ave. W.: 1,873 square feet of office space, built in 1923. No vacancy. 1902 Minnehaha Ave. W.: 4,400 square feet, built in 1923. No vacancy. 429-475 Prior Ave. N.: 467,206 square feet, built in 1955. No vacancy. 692-710 Prior Ave. N.: 126,600 square feet, built in 1960. 24.5% vacant. 716 Prior Ave. N.: 72,000 square feet, built in 1923. No vacancy. 720 Prior Ave. N.: 31,973 square feet, built in 1923. No vacancy. 720 Vandalia St.: 11 475 square feet, built in 1919. No vacancy. 727 Vandalia St.: 124,817 square feet, built 1955. No vacancy. 739 Vandalia St. and 2210 Territorial Road: 52,300 square feet, built in 1985. No vacancy. 740-756 Vandalia St.: 224,500 square feet, built in 1955. 28.3% vacant. 760 Vandalia St.: 14,000 square feet, built in 1995. No vacancy. 777 Vandalia St.: 9,600 square feet, built in 1955. No vacancy. 795 Vandalia St.: 11, 472 square feet, built in 1999. No vacancy. 807 Hampden Ave. N.: 267,376 square feet, built in 1955. No vacancy. 788 Hampden Ave. N.: 286,954 square feet, built in 1979. 34.7% vacant.

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