Behind the scenes of the $928M Marina Heights sale

Above: Marina Heights Brokerage | 9 May |

The $928 million sale of Marina Heights was a herculean effort involving a leaseback, a development agreement involving a property tax abatement, at least two partnership agreements, and, of course, “a typical real estate purchase deal.”  

Transwestern Investment Group and JDM Partners purchased the 2 million-square-foot mixed-use development from State Farm in a sale leaseback at the end of 2017.  

JDM Partners, along with a private partner, handled the equity side of the deal, and Transwestern Investment Group will provide management services, says Andrew Abraham, who worked on the deal.  

“It was a very enjoyable transaction to work on and had a lot of interesting pieces to it,” says Abraham, who’s a president and shareholder at Burch & Cracchiolo.  

JDM Partners and its partner had to work out a partnership agreement, and then they worked out a partnership agreement with Transwestern Investment Group, Abraham says. On paper, Corporate Properties Trust III LP made the acquisition of Marina Heights.  

Years prior to Marina Heights’ development, Arizona State University, which owns the land there, and the City of Tempe entered into a development agreement. This agreement, Abraham notes, dealt with the abatement of property taxes and was one of the most important elements that attracted State Farm and the new buyers of Marina Heights.  

There’s a gradual property tax abatement for the development for 15 years, Abraham says. ASU does collect ground rent on Marina Heights, and this ground rent helps fund the public university. 

“This transaction, not only from a pure private economic interest, was a strong transaction for the buyer,” Abraham says.   

Marina Heights will house 8,000 State Farm employees at full capacity and has restaurant spaces and a gym located on the site.  

The property was developed by Ryan Companies US, Inc. and Sunbelt Holdings. Construction on the project was finished in 2017.  

The sale of Marina Heights was not a deal that lawyers worked on for many years, Abraham says.  

“It was more of a 60-day deal from start to finish from the legal side,” he mentions.  

Marina Heights was Transwestern Investment Group’s third sale leaseback with State Farm. The investment group also acquired State Farm office facilities in Dallas and Atlanta.  

With the sale and leaseback over for Marina Heights, will Arizona be seeing another major commercial real estate undertaking, and eventual sale, of this kind?  

The Valley may see many more of these types of deals where there’s a property tax abatement involved that heavily incentivized the investment, Abraham says.  

Many parts of the Valley are being very creative with efforts to attract major commercial real estate investments. There is one snag, though. There just isn’t a lot of land availability like there was for Marina Heights, he says.  

“Yes, I see more of these kinds of projects on the horizon, but probably not at the same volume in size,” as Marina Heights, Abraham says.  

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