No listing? No problem: $7M Topsham property changes hands in unlisted deal
TOPSHAM — A New Jersey investment group saw the nearly $7 million purchase of a medical office building in Topsham as a great return-on-investment opportunity due to the high quality of the building and its tenant.
The buyer group, whose individual identities were not disclosed, purchased 4 Horton Place in Topsham from Jim Howard for $6,976,705. Matt Pouliot and Don Spann of RE/MAX Riverside brokered the deal, which closed Dec. 1, 2017.
Pouliot has worked with the buyers previously on other Maine investment projects. The Topsham property had not been on the market.
"I mentioned to Don [Spann] that my clients were interested in buying investment-grade property, and Jim decided to sell," Pouliot said.
Jim Howard is president and CEO of the Priority Real Estate Group LLC, a commercial real estate investment and development company in Topsham. Since founding the company in 1998, he's grown the business from owning one property to having built, owned and managed a portfolio of $100 million in commercial real estate.
The 14,320-square-foot building on 1.4 acres at 4 Horton Place was one of his projects, built in 2007. The building goes by the name Topsham Family Medicine and is occupied by medical practitioners who individually sub-lease space from a single undisclosed leasee. That single leasee leases the space from the building's owners on a triple-net basis, with the leasee responsible for covering property taxes, property insurance and maintenance.
The buyers aren't planning any changes, said Pouliot.
"These buyers are looking for investment-grade properties, where the tenants are institutions that have signed longer-term lease agreements structured as triple-net deals," he said. "If there were more of these types of properties available, the buyers would probably be interested in them. They look all around the country for investment-grade properties."
Buildings in excellent shape with long-term tenants are desirable to investors for their guaranteed return, but hard to find, said Pouliot.
"In Maine, in general, it's difficult to find buildings that are in good condition that also have good, long-term lease agreements," he said. "Triple-net is a desirable lease structure for an owner because they don't have to do anything to the building."
Investors are interested in purchasing Class A property with longer-term lease agreements in place, and out-of-state investors would be happy to be investing in Maine, he said.
"But there's definitely a lack of inventory," he said. "The problem is more one of inventory than demand. If we could figure out a way to put together more properties like this one, there would be even more sales closing."