Feldman Equities, a real estate firm that owns and manages office buildings in Tampa and St. Petersburg, plans to bring its turnaround expertise to a Fort Lauderdale property.
The company is raising capital to buy and renovate Pinnacle Corporate Park, a two-building, 260,000-square-foot complex located north of downtown Fort Lauderdale and about halfway between Miami and West Palm Beach.
“Like Tampa Bay, the Miami/Ft. Lauderdale MSA is one of the fastest growing metros in the country. It’s an area we’ve been looking to invest in for a long time,” said Mack Feldman, vice president of asset management at Feldman Equities. “Strategically, it makes the most sense as our next market to expand into and this is just the first of what we expect to be many acquisitions. We’ve spent the past few years digging into market data and waiting for the right property to present itself. We found that in Pinnacle Corporate Park and are excited to bring this opportunity to our investors.”
Feldman Equities and its joint venture partners currently own or manage over four million square feet of Florida office space. Its portfolio includes office properties in the Tampa-St. Petersburg area including in downtown St. Petersburg, downtown Tampa, Carillon and Sarasota.
“Every office building that we acquire typically undergoes a major renovation. These renovations includes such items as brand new high-end fitness centers, 24-7 chill zones for tenants, restaurants, conference centers and business centers, and renovations that touch almost every surface of a building,” said Larry Feldman, president and CEO, during a webcast describing the Pinnacle deal. “We buy existing buildings in great locations that for whatever reason are not fully leased … and we use creative renovations to drive up occupancy and to drive up rental rates.”
The Pinnacle buildings are 83 percent leased with a diversified mix of tenants, ranging from financial services and healthcare companies to technology firms. All the tenants have strong credit and the current owner collected 100 percent of its rents throughout the Covid-19 pandemic.
But the property is underperforming due to a lack of amenities and Feldman Equities will add them, Feldman said. The company also plans to install systems that treat the air with ionization and are effective in controlling the spread of Covid and flu as well as allergens, he said.
Feldman is convinced workers will want to come back to their offices instead of continuing to work from home.
“People need people. Part of the workplace is a social organization and interchange of ideas which is as basic a human need as food and shelter. After a while, you get tired of Zoom. It does not replace human interaction,” he said.
As workers return, they will want to reconfigure their office space. For the past several years, companies have been putting more people into smaller spaces. Now that trend is reversing, Feldman said.
“When people return to the office they want to spread further apart,” he said. “We’re already seeing the return of the private office.”
Feldman Equities plans to invest over $3 million in renovations and “spec suites,” or suites the company builds out with furniture so tenants can move in quickly, Mack Feldman said.
The total equity raise is about $19.5 million. Larry Feldman and two friends have put up $4.1 million as the sponsor, and $15.4 million will come from investors outside the company.
The deal is 90 percent subscribed and is expected to close in early June, Mack Feldman said.
The company projects a 15.7 percent internal rate of return to investors over five years. It also projects a 2.0 equity multiple, which is an indication of how much money an investor can make on their initial investment, and a 7.5 percent average cash on cash return, a measure that calculates the cash income earned on cash invested.