RJ Kelly to Pay Brookwood Near $53M for 527,000 SF Flex/Office Space Listed by Colliers

June 26, 2017 — By Joe Clements

72 Cherry Hill Dr, Beverly MA

DANVERS—The majority of a nine-building, 602,000-sf flex/office portfolio straddling this North Shore community and neighboring Beverly is being acquired by RJ Kelly Co. from Brookwood Financial Partners, market sources are indicating to therealreporter.com, with pricing for Cherry Hill Park expected to be in the low $50 millions. Colliers International is the exclusive agent for the assemblage, its Capital Markets team garnering a rapid response for an assignment that commenced in late winter and apparently has a winning suitor nailed down before mid-year.

“They’ve got that,” concurs one observer of RJ Kelly, the source pegging a figure around $53 million but relaying the agreement does not include a 41,000-sf office building at 5 Cherry Hill Dr. in Danvers or 66 Cherry Hill Dr. in Beverly. It is unclear what the status is of the former, with Colliers International not responding to inquiries as of press deadline, but a main occupant of 66 Cherry Hill Dr., is reportedly going to buy that 32,700-sf structure for an undetermined amount, the denizen in question being Windover Construction. Supporting such a result is a recent corporate filing, 66 Cherry Hill Drive LLC, its managers being Windover Construction President Lee R. Dellicker and principal Stuart A. Meurer. The stated business purpose includes “purchasing real property.”

“It makes sense,” one CRE veteran says of Windover, a firm founded 10 years ago, and such an action would be in keeping with other companies taking advantage of low-interest rates to own versus rent.

Having RJK as a competitor for the rest of Brookwood’s holdings at CHP is also not hard to fathom. The Burlington-based company is an active investor throughout Route 128 North, having this past year purchased a first-class office asset in Wakefield just south of Cherry Hill Park. Observers also point to RJK’s hands-on, vertically integrated platform as the sort of operation which can help boost occupancy at the park that is presently 85 percent leased. Three office buildings totaling 134,000 sf are about 64 percent committed, but one of those is 66 Cherry Hill Dr. and the other is 5 Cherry Hill Dr.

RJK President and CEO Brandon D. Kelly did not respond to inquiries from Real Reporter prior to deadline. Other principals of the firm are Chairman and company namesake Richard J. Kelly and Executive VP Scott Kelly. Rick Griffin serves as Director of Investments at the entity whose diverse holdings includes flex, industrial, mixed-use, office, retail and self-storage properties throughout New England and beyond.

If pricing for the RJK pact bears out, the buildings totaling about 525,000 sf would yield roughly $100 per sf. That is in line with estimates provided by CRE professionals spoken to for a February Real Reporter article revealing Brookwood was opting to cash out on the park which the firm calls home, the group running an investment footprint extending across the United States. Brookwood leaders are principals Thomas W. Brown, Thomas N. Trkla and Kurt M. Zernich. “It’s a good result for everybody,” offers one source familiar with Cherry Hill Park who says consolidations to other locations was a catalyst in the space opening up in the portfolio, not anything wrong with the real estate, and that contact says flex product is especially popular—and harder to find—than ever on the North Shore, enhancing the chances of a return to occupancy above 90 percent over the near term.

RJK will supposedly purchase 24-42, 33, 35, 37 and 54 Cherry Hill Dr. in Danvers and 72 Cherry Hill Dr. in Beverly, with Brookwood located in 72 Cherry Hill Dr. The portfolio has been held by the seller since paying $15.0 million in December 2010. About 78 percent of the space is flex product, something Colliers Capital Markets principal Douglas Jacoby deemed “attractive” in describing the listing for the February story announcing its launch. “People are really liking flex product these days,” he said in the article where reasons such as solid fundamentals, a lack of new construction and improved yields versus other asset classes were outlined for enhancing the sector’s cachet.

Other members of the Colliers team handling Cherry Hill Park are principal Scott Dragos, Assistant VPs Anthony Hayes and Timothy Mulhall and Associate Daniel Hines. Also providing insight for bidders has been Colliers principals Timothy Brodigan, SIOR, and Gregory Klemmer, SIOR, whose relevant roles as exclusive leasing agents at Cherry Hill Park has provided an enhanced measure of knowledge about the portfolio. It is described by Colliers as “an excellent critical mass value-add opportunity” yet one still featuring “secure, durable cash flow” from a roster of solid-credit companies including Abiomed, Amphenol and Medtronic. The lineup and other aspects help generate a rent premium over competitors, Colliers indicates.

“Brookwood has done a great job” as Cherry Hill Park’s steward, according to Jacoby, with a series of capital improvements made to further stabilize the holdings for a changing of the guard. Observers could not say just how quickly the deals with RJK or Windover will be consummated, but those tracking the activity report the selection of RJK has only recently been decided. “It’s very fresh,” says one.