Dallas-based developer Hillwood paid the city $1,917,029 from proceeds of the first-quarter sale of the Amazon.com center on 37.5 acres at 13450 Waterworks St. in AllianceFlorida at Cecil Commerce Center.
Hillwood, the city’s master developer at the West Jacksonville business park, reported the payment in its required first-quarter update to the city for Jan. 1-March 31, 2022.
Through Waterworks Bldg F-1 LLC, Hillwood sold the 278,237-square-foot Amazon facility, which was completed this year, to an institutional investor.
The Amazon property sale was valued at $59.9 million, according to the mortgage by The Prudential Insurance Co. of America.
That Feb. 16 mortgage was recorded Feb. 22 with the Duval County Clerk of Courts at almost $38 million.
The mortgage references the property as part of a Stockbridge Logistics Portfolio II purchase of nine properties in six states. Stockbridge is based in San Francisco.
Seth Kemper, with a title of senior vice president of SPB, signed the mortgage as the borrower.
Kemper is identified on the stockbridge.com site as senior vice president of SPB. The site says Kemper also is head of client reporting for the firm’s Platform Business, responsible for oversight of performance reporting, tax structuring, and operational matters.
The Stockbridge Platform Business focuses on investment sourcing, structuring and management expertise for institutional investors.
Payments hit $7.88 million
The $1.9 million boosts Hillwood’s total profit-sharing payments to the city to $7.88 million, according to Hillwood Executive Vice President Dan Tatsch.
Hillwood also paid two $500,000 extension fees to the city about a decade ago to extend its performance benchmarks in the wake of the 2007-09 recession.
The payments stem from the 25-year Master Disposition and Development Agreement made in 2010 between the former Jacksonville Economic Development Commission and Hillwood.
That agreement was 10 years with three five-year renewal options. Hillwood is midway through the first renewal term that started in mid-September 2020.
The agreement calls for Hillwood to build-out AllianceFlorida on about 4,499 acres of city property, the former Naval Air Station Cecil Field, off Normandy Boulevard and 103rd Street in West Jacksonville.
It is designed for the city to share in the profits. As the master developer, Hillwood typically secures the tenant, buys the land from the city, develops the project and then sells the property to an investor.
The city receives 10% of the profit proceeds for industrial space and it will be 50% for mixed-use development.
No mixed-use deal has been done.
Tatsch said previously the checks quantify the success of the concept. “When those checks happen, it means we are all doing something right.”
Tatsch said Hillwood has developed about 3.225 million square feet at AllianceFlorida.
Counting the 300,000 square feet developed by SunCap for the Federal Express Ground facility, the benchmark qualification square footage for the city is 3.525 million square feet.
Hillwood reported it received a final certificate of occupancy for the Amazon facility, built on Parcel F, in the first quarter.
The company said in a previous report that it executed a long-term lease in January 2021 for the Seattle-based e-commerce retailer. It is a sortation center.
Amazon.com says sortation centers are “midmile” delivery centers in which the company sorts customer orders by ZIP codes before handing off to delivery partners for final delivery.
Amazon already operates a 1 million-square-foot fulfillment center in AllianceFlorida.
More activity
In other activity during the first quarter, Hillwood told the city it executed a nonbinding letter of intent with a prospect interested in buying 5 to 10 acres for a retail facility.
As of the end of the quarter, Hillwood and the prospect were negotiating a purchase and sale agreement.
Hillwood also continued to negotiate a letter of intent with a developer interested in buying 10-20 acres for distribution operations.
Hillwood said it also received and responded to inquiries from brokers representing prospects and clients interested in large amounts of distribution space. They seek:
• 20-40 acres to buy for an industrial facility
• 1-2 acres to buy for a retail facility.
• 800,000-1,000,000 square feet to lease for distribution space. During the quarter, the client toured AllianceFlorida and discussed a potential development site in the park. As of the end of the quarter, the client was evaluating its options.
• 400,000-500,000 square feet of distribution space to lease. As of the end of the quarter, the client was evaluating its options.
• 400,000-500,000 square feet of distribution space to lease
Distribution space is one of the area’s hottest commodities, according to industrial market reports from real estate firms. Many companies are leasing warehouse space for e-commerce storage and delivery.
“It’s a busy time. There is a lot of activity,” Tatsch said July 1.
“Things continue to be good. We haven’t seen any contraction from a tenant standpoint related to the economic pressures that everyone is writing about,” he said, referring to inflation and supply chain challenges.
While a contraction may happen, “we haven’t seen it yet and we are hoping we never do see that.”
