VOL. 122 | NO. 26 | Tuesday, February 13, 2007
Memphis Real Estate Recap
DCT Reacquires Eastpark II Through Buyback Option
5405 Hickory Hill Road
Memphis, TN 38141
Sale Amount: $11.6 million total
Sale Date: Jan. 25, 2007
Buyer: DCT-Eastpark II LP
Sellers: Eastpark Leasing LLC ($85,263); Guiness Eastpark II LLC ($1.3 million); Ledoux Eastpark II LLC ($1.7 million); Mottola Eastpark II LLC ($736,633); Breslow Eastpark II LLC ($2 million); Dawson Eastpark II LLC ($826,569); Bathelt Eastpark II LLC ($1.4 million); Meyer Eastpark II LLC ($963,847); Hamilton Eastpark II LLC ($734,533); McLellan Eastpark II LLC ($1.1 million); Campisano FJ Eastpark II LLC and Campisano JM Eastpark LLC ($441,668); Zobell Eastpark II LLC ($294,770)
Details: Eastpark II, a 340,000-square-foot industrial building on the west side of Hickory Hill Road south of East Holmes Road. The sellers were part of a tenants-in-common (TIC) arrangement with Denver-based DCT Industrial Trust, formerly Dividend Capital Trust.
Eastpark II was part of DCT's 1031 program, said Rob Sistek, DCT's vice president of capital markets.
1031 refers to IRS Section 1031, which states, in short, that investors who sell a real estate asset and use that money to invest in other real estate can defer the capital gains tax on the property.
In this case, Sistek said, DCT's operating partnership had a call option to evaluate the property and possibly buy it back.
"This was part of an early buyback option, if you will, where given our listing on the New York Stock Exchange and what they call change of circumstance, we were able to extend an offer to ... basically all the TIC investors in the 1031 program," Sistek said. "We said we'll buy back your property, and in exchange, we'll give you operating partnership units. ... Basically, at the end of the day, it's equity ownership in DCT Operating Partnership LP, which is similar to common stock."
DCT listed on the New York Stock Exchange in December and trades under the symbol DCT.
The company in April 2005 bought Eastpark I and II - around 890,000 square feet and 340,000 square feet respectively - along with seven properties in Maryland and two in Miami. A month before that, it bought Shelby 4, Shelby 5 and Shelby 19 on Pleasant Hill Road south of East Shelby Drive in Memphis, along with one property in Pennsylvania. The company still holds Eastpark I.
In all, Sistek said, DCT owns, manages and has under development more than 60 million square feet, including more than 4.3 million square feet in Memphis.