Meadows Business Park purchased for $25 million

October 04, 1994|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

In one of the largest Baltimore-area commercial real estate transactions of the year, a New York investment firm has purchased a 22-building business park in Woodlawn for roughly $25 million.

Emmes & Co.'s acquisition Friday of the Meadows Business Park, a 1 million-square-foot collection of office and retail properties, also signals that investors are once again willing to shoulder the risk associated with highly speculative real estate deals, in exchange for anticipated positive returns.

In the case of Meadows, the Baltimore County park is slated to absorb a significant hit next year, when the U.S. Health Care Financing Administration moves to a $126 million headquarters nearby. HCFA occupies more than 250,000 square feet of office space at Meadows, according to the federal government. The park, whose buildings were constructed between 1961 and 1973, is roughly 80 percent committed.

"Certainly there's risk involved, but that's our business," said Richard R. Previdi, an Emmes partner. "We know we've got a tough row to hoe, but fundamentally these are good, older properties where hard work can make the difference and we can make some money on the investment."

At an estimated $25 million, Emmes will have less difficulty turning a profit than previous owner Cohen/Flax Management Inc.

The Emmes purchase represents a 57 percent discount off the $58.7 million price Cohen/Flax paid in August 1987, at the top of the last decade's commercial real estate surge, according to county records.

Cohen/Flax was pressured to sell the park by lender Chase Manhattan Bank, which financed the 1987 purchase, sources said. Cohen/Flax executives, who had attempted to sell nine of the park's buildings in 1992 for $27.3 million, did not return telephone calls for comment.

In all, Emmes controls more than 70 buildings in New York and Philadelphia valued at $400 million, Mr. Previdi said. Meadows is its first Maryland acquisition.

Apollo Real Estate Investments Ltd. Partnership, an affiliate of a $4 billion merchant bank that holds the mortgage on the 25-story 250 W. Pratt St. downtown, is a partner with Emmes in Meadows.

Emmes intends to invest between $2 million and $3 million to upgrade the property and attract new tenants once the government departs, Mr. Previdi said. Cohen/Flax in the past two years has invested a significant amount to maintain the buildings.

The only nonoffice building in the transaction is the 108,848-square-foot Meadows Park Shopping Center.

"I think it's a very positive sign that they bought the property with the full knowledge that the government is moving out," said K. Alan Orman, an assistant vice president of Colliers Pinkard, a local commercial real estate services firm. "At the right price, it puts them in a position to offer aggressive lease rates to prospective tenants."

Others with knowledge of the area were not so quick to agree.

"Traditionally it's been much tougher to lease space inside the Beltway than outside," said Walter L. Patton, a KLNB Inc. principal. "Hopefully they can sit while the market catches up with them."

"We're concerned, but our strategy is long-term," Mr. Previdi said. "Our niche is to work properties with sound fundamentals, and that's what we have here."

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