STAG Industrial Holdings, LLC recently purchased the massive industrial building at 40 Pepes Farm Road in Milford, CT for $13,250,000. The transaction took place on February 28, 2017 and was sold by Calare Properties, a private real estate investment firm and operator based in Boston, Massachusetts. The property was listed on market for 140 days at an initial asking price of $14,100,000 prior to being sold. Previous listings of the property in October and November 2016 stated a 6.75% capitalization rate. The buyer, STAG Industrial, is a publicly traded real estate investment trust (REIT) specializing in the acquisition and operation of single-tenant, industrial properties in the U.S.
Originally built in 1981, the 200,000 square foot warehouse sits on 14.56 acres of land located less than two miles from Interstate-95 and the Boston Post Road. The building consists of one-story and features 18 loading docks, a 12-foot drive-in door, and 28-foot clear heights throughout. Despite the good condition of the property and scarcity of high-bay warehouse space, the site was not always an attractive investment opportunity.
In fact, the seller purchased the property in December of 2014 for only $6,600,000 and at 50.0% occupancy. Calare Properties immediately began implementing extensive property upgrades including new LED lighting, landscaping, and updates to the exterior dock doors. Just under two years later in September 2016, the building was reduced to a single unit and entered into a 10-year lease at $5.50/square-foot NNN with Thule, Inc. The tenant is a Swedish-based manufacturer and distributor of transport equipment, ranging from bike racks to backpacks.