Dallas-based developer Hillwood paid the city almost $2.16 million from the proceeds of its third-quarter sale of property to Gate Petroleum Co. in AllianceFlorida at Cecil Commerce Center.
Hillwood, the city’s master developer at the West Jacksonville business park, reported the $2,158,127 payment in its required third-quarter update to the city for July 1-Sept. 30, 2023.
Hillwood sold 13.3 acres to Jacksonville-based Gate Petroleum Co., which said it plans to build a convenience store and car wash on the site at southwest Normandy Boulevard and POW-MIA Memorial Parkway.
Duval County Clerk of Courts records show that through JCCC Parcel Q-1 LLC, Hillwood sold the land to Gate Petroleum on July 26 for $5.78 million. The city deeded the land to Hillwood the same day for about $365,000.
The $2.16 million boosts Hillwood’s total profit-sharing payments to the city to $10 million since its 2010 agreement to serve as master developer.
The city receives 10% of the proceeds from the net profit for industrial space and 50% for mixed-use development, which is after deducting transaction costs and after Hillwood has recovered its invested equity plus a contractually agreed preferred return on that equity.
The Gate land sale is the first mixed-use sale.
City payments
Previous profit-sharing payments include:
• Almost $1.92 million from proceeds of the first-quarter 2022 sale of the 278,237-square-foot Amazon.com sortation center 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.
• $1.98 million from the sale of the 1 million-square-foot Wayfair Inc. fulfillment center in third-quarter 2020 to an investor for almost $75.5 million.
• $1.37 million for the sale of the 1 million-square-foot Amazon.com distribution center in first-quarter 2018 to an investor for $95.5 million.
• Almost $1.09 million for the fourth-quarter 2015 sale of the JinkoSolar building at 4660 POW-MIA Memorial Parkway to an investor. Hillwood built the 407,435-square-foot structure as a speculative development, which was then leased by solar-panel maker JinkoSolar and furniture distributor Industry West.
• Almost $1.53 million for the sale to investors of the General Electric Oil & Gas building. Hillwood sold the 510,000-square-foot GE Oil & Gas valve-manufacturing plant in first-quarter 2015 for $57.6 million. It had been built speculatively. But Baker Hughes Co. is closing the plant this year. Baker Hughes sent a notice May 18 to state officials that it will lay off 183 workers beginning in January and continuing through the end of 2024. GE merged its oil and gas division with Baker Hughes in 2017. GE retained a majority stake in Baker Hughes after the merger but it sold off its stake beginning in 2020.
The payments stem from the 25-year Master Disposition and Development Agreement made in 2010 between the former Jacksonville Economic Development Commission and Hillwood.
The agreement was effective Sept. 15, 2010, with an initial term of 10 years with three five-year renewal options.
Hillwood is in the first renewal term that started in mid-September 2020.
While not part of the profit-sharing payments, 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.
That money represents additional funds paid to the city as a result of its contract with Hillwood.
The master development 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.
Hillwood Executive Vice President Dan 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.
That includes the two 1 million-square-foot centers for online retailers Amazon.com on about 86.5 acres and home-furnishings company Wayfair on 80 acres.
Hillwood also sold a tract to FedEx Ground Package System for its facility. Counting that 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.
A deal on the megasite
Another big Cecil Commerce Center project is Cosentino Group, although the city is leading that deal rather than Hillwood.
Cosentino intends to develop on the megasite at Cecil Commerce Center.
In May 2023, the Spain-based international company’s announced its first U.S. manufacturing facility would be in Cecil Commerce Center.
Cosentino makes sustainable countertops, flooring, facade materials and other surfaces for architecture and building design.
It plans to break ground on the first phase in January 2025.
The Jacksonville City Council approved a land sale and incentives package for Cosentino for 330 acres with an option to buy 150 more acres.
The megasite is 745 acres at southwest Interstate 10 and Cecil Commerce Center Parkway. About 600 acres can be developed, according to the city.
If Cosentino buys the 480 acres, the city would have about 120 developable acres left at the site.