Robert Martin Execs Discuss Growth Plans After $487.5 Million Mega Purchase Deal
John Jordan | August 21, 2019
(Part two of two)
ELMSFORD— Real Estate In-Depth recently sat down with Robert Martin Co. CEO Timothy Jones and Managing Director Greg Berger, to discuss the particulars of the firm’s $487.5-million purchase of a 56-building portfolio, most of which was originally developed by Robert Martin and later sold to the predecessor of Mack-Cali in the late 1990s.
Jones and Berger discussed the reasons behind its mega deal with equity partner HIG Realty Partners of Miami that was the largest in terms of value in the history of Westchester County in the July edition of Real Estate In-Depth.
The two executives, who are the second generation to lead the storied firm, founded by pioneer Westchester developers Robert Weinberg and the late Martin Berger, discussed the rationale behind the firm’s purchase as well as its growth plans in both the industrial-flex and multifamily sectors going forward.
The firm, prior to the deal owned approximately 3 million square feet of space, half of which was residential.
The Mack-Cali purchase involved 3.1 million square feet of mostly industrial-office and flex space. The firm currently owns approximately 1.5 million square feet of residential and industrial space in Connecticut, including the nearly 300,000-square-foot Stamford Executive Park.
Commenting on the firm’s reasons for purchasing the portfolio from Mack-Cali, Jones said, “We really think the industrial market is very strong.” He added that the combination of the fact that the Westchester suburban market is land-constrained, along with more and more retailers seeking industrial space for its e-commerce operations, have positively impacted the sector.
Industrial demand has been very strong in Manhattan, Brooklyn, Queens and the Bronx. In addition, many industrial properties have been converted to multifamily in New York City. Those two market forces have prompted many tenants to look for space in Westchester. At the moment, the firm’s industrial-flex space is currently 92% occupied.
Jones said that the firm is planning to invest approximately $15 million in capital improvements to the roofs, HVAC and parking lots, as well as the installation of solar at its portfolio where he said the firm believes there is considerable opportunity.
“We’re just trying to figure out who we are going to do it (solar) with because we will work with somebody who is an expert, and exactly where we will put it,” Jones related.
He said the solar initiative at the portfolio could involve approximately 10 megawatts of electricity that will be converted to solar. Berger noted that the solar initiative involving its properties and parking lots, along with battery storage, will provide the company with great opportunities in the years to come.
“The installations make sense if you can get critical mass in one location,” Jones added.
Robert Martin will earmark approximately $40 million over the next three years in capital improvements, including a small program to upgrade some of its office properties.
Noting that NYSERDA, Con Edison, the New York Power Authority and the federal government will be offering assistance, he said that due to the size of the company’s portfolio, “We will actually have an impactful effect on the supply of electricity” in Westchester County.
The company at present does not see a great deal of opportunity in geothermal technology, however.
Jones said the firm is also reviewing some potential development opportunities on vacant land it owns in Connecticut and Westchester, including parcels in Yonkers and Greenburgh.
The firm plans to demolish 555 White Plains Road in Tarrytown, a 135,000-square-foot office building, and replace it with a 115,000-square-foot mixed-use development consisting of a health club and a self-storage facility. The plan would call for an approximately 40,000-square-foot health club and more than 70,000 square feet of self-storage space.
The company expects to file plans for municipal approvals in the next six months for the project that is estimated to cost between $15 million to $20 million.
Robert Martin will also be looking to build new multifamily developments. The firm completed “The Elm,” a 95-unit project at the former Antun’s in Elmsford a year ago. The project, which is fully leased, also included approximately 12,000 square feet. He said a daycare user is expected to lease approximately 9,500 square feet of space at the property.
The firm currently has a multifamily portfolio in Westchester County of approximately 600 units and a total portfolio of 1,500 units that includes an interest in a property in Jersey City, NJ and another in Rocky Hill, CT.
The company also believes there could be opportunities with the approximately 1 million square feet of space it owns that are located in federally designated Opportunity Zones., including approximately 13 buildings totaling 750,000 square feet of space in Mount Pleasant. The firm’s office-flex space in Stamford, CT is also located in an Opportunity Zone.
“We are exploring ways to take advantage of those (zones),” Jones said. He noted that there could be some owner-occupant and maybe some possible redevelopment opportunities in Stamford. The play in Mount Pleasant could be for biomedical space since it is located adjacent to New York Medical College, Regeneron and the proposed bioscience project to be developed for Westchester County on the North 60 parcel on the Grasslands campus.
Jones said that one major difference between the old Robert Martin Co. and the company after its mega-deal with Mack-Cali is that in addition to possible further acquisitions, the company now will be much more willing to sell some of its properties, particularly to tenants looking to be owner-occupants.
“There are definitely companies that want to own their own building and with good reason particularly if they saw the rent go from $12 (a square-foot) to $20 (a square-foot) over the past four years,” Jones said.
Editor, Real Estate In-Depth