Liberty Property Trust's Jacksonville holdings for sale are worth $145 million


Butler Plaza, along Belfort Road, is anchored by Wounded Warrior Project and other organizations and is part of Liberty Property Trust's almost three dozen properties being sold.
Butler Plaza, along Belfort Road, is anchored by Wounded Warrior Project and other organizations and is part of Liberty Property Trust's almost three dozen properties being sold.
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Liberty Property Trust's Jacksonville holdings, which are being sold, are valued by the Duval County Property Appraiser at $144.6 million, according to a Daily Record analysis.

Liberty Property, based in Malvern, Pa., announced last week it has agreed to sell 97 properties in five states, including all 32 buildings in Jacksonville, for $705 million.

It did not identify the buyer. The sale should be completed in two stages, starting late this year and concluding early next year.

Michael Heise, vice president and Jacksonville city manager, said Liberty Property is refocusing its strategy toward industrial properties that can focus on logistics rather than suburban office holdings.

"That's the real reason behind it," he said.

The bulk of Liberty's Jacksonville holdings are in the Southpoint and Butler Boulevard areas of Southside, a prime office market.

Among its most recognized area developments are Center Point Business Park, Butler Plaza, Liberty Business Park, the McKesson Building and the PHH Building.

"It's not that we don't think we have great assets in Jacksonville. We do. They will continue to grow in value," Heise said, explaining that the Southside locations are in high-demand areas.

"It is a strategic shift on our part, not a lack of confidence in our assets in Jacksonville," he said.

Heise will transfer to the Dallas office. He was not sure when the sale of the Jacksonville properties would close.

Local holdings top 2.1M square feet

Liberty's news release about the sale agreement did not break down the value of the properties by state. While it also has holdings in Orlando, Tampa and South Florida, it is selling only its Jacksonville properties in Florida.

The Daily Record reviewed the Duval County properties owned by Liberty Property Limited Partnership, including one by Liberty Property Development Corp.

The property appraiser's website shows 25 properties, some with multiple buildings.

They total 40 individual buildings or lots, including a parking garage, two parking lots, three vacant properties and two utility buildings.

The property appraiser's office reports a 2014 "in progress" market value of $144.6 million and a 2013 taxable value of $135.8 million.

The Jacksonville holdings include 1.2 million square feet of office space and about 965,000 square feet of flexible-use space, including about 79,000 square feet of distribution.

Heise said the properties are 95 percent occupied.

The holdings also comprise almost 318 acres of developed and undeveloped land, primarily in Southside, and include 115 acres along Imeson Road in West Jacksonville.

Its properties were built primarily from 1986 to 1999, with several developed during the 2000s, ending with the Concorde Career College building in 2012.

The website for the Jacksonville office shows a staff of 13 in property management and leasing and development.

Along with Heise's relocation, another employee has transferred to South Florida.

Heise said he didn't know the plans of the remaining 11 employees, but said the buildings will need management services.

Roots in Rouse

Liberty Property Trust develops, acquires, leases and manages properties.

It is big: A $7.3 billion real estate investment trust that owns more than 660 office and industrial properties, totaling 80.6 million square feet of space in more than 21 markets throughout the United States and the United Kingdom.

It also owns a land bank of almost 1,800 properties zoned for commercial development.

But it started small in 1972 and those roots quickly branched into Jacksonville.

The timeline on the libertyproperty.com site explains that Liberty's predecessor company, Rouse & Associates, was formed in 1972 by Willard "Bill" Rouse III, George Congdon, David Hammers and Menard Doswell to develop warehouse space in southern New Jersey.

Rouse & Associates developed more than 2 million square feet in the first two years.

It began its national expansion by opening an office in Jacksonville, developing 350,000 square feet of industrial space in the first year.

In 1994, Rouse & Associates became a real estate investment trust and was renamed Liberty Property Trust. Bill Rouse chaired Liberty Property Trust until his death in 2003. 

Hammers played a pivotal role in the Jacksonville developments and told the NAIOP Commercial Real Estate trade association in January 1998 that he had been in town long enough to remember ''when the Committee of 100 had 45 members.''

The Committee of 100 was the predecessor of today's JAXUSA Partnership, the economic development division of the JAX Chamber. Hammers still resides in the area.

Liberty Property said in the news release last week that the 97 properties to be sold total 6.6 million square feet of space and 159 acres.

The sale comprises 4 million square feet of office space, 2.3 million square feet of flexible-use space and 274,000 square feet of industrial properties.

In addition to Liberty's entire Jacksonville portfolio, the sale includes all of the 23 office properties in Maryland, 24 in Southern New Jersey and six in the Fort Washington submarket of Philadelphia as well as 12 flex properties in Minnesota.

"This transaction furthers our strategy to increase our portfolio allocation to industrial real estate and to concentrate our office portfolio in fewer focused markets," said Liberty Property Chairman and CEO William Hankowsky in the release.

"We expect these steps to enhance our ability to exploit our expertise in creating and managing high-quality office environments in which we can create significant future value," he said.

Seeing it from both sides

Still, some area real estate executives privately expressed concern about losing Liberty. They worry that office development companies are departing, leaving institutional owners and investors rather than developers.

At the same time, Jim Citrano, a retired real estate professional with 40 years of experience in Jacksonville, said he sees both sides.

Citrano has done deals with Rouse and Liberty and also is a personal friend of Hammers. He knew the four original partners.

Citrano said that when Rouse & Associates became Liberty Property, the management structure changed and the company became more of a corporate entity.

As such, he views the decision to sell the Jacksonville properties through that lens.

"A decision was made by that group to consolidate their business into markets that have more potential growth than Jacksonville did," he said.

Citrano said Jacksonville is one of Liberty's oldest developed markets and the company probably was looking for other opportunities.

"If you take a look at Jacksonville, particularly post-recession, I think they probably figured Jacksonville had less potential and was ripe for sale," he said.

Citrano said one could take the "negative" view and say the area was not attracting investment. He explained that smaller-tier office markets, like Jacksonville, might have fallen harder in the recession and not recovered as quickly.

"Or you could say we are such a good and stable market that we have good and salable properties. That's a good sign," he said.

"Somebody's buying them."

Liberty Property in Jacksonville by the numbers

$145M: Value of properties

32: Buildings owned

95%: Occupancy rate

2.1M: Square footage

318: Acres owned

13: Employees

1972: First year here


[email protected]

@MathisKb

(904) 356-2466

 

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