Latest / Rick Outzen: (we don’t) color on the dog / Inside FPL HQ Deal
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- Rick Outzen: I'm Rick Altson. I've got with me Michael Carro, the broker of the deal of the year, or even bigger than that. One Energy Place. It's the home of Florida Power and Light, the original Gulf Power building. It is an icon on Pensacola Bay for gosh, it's night in the mid-1980s. Michael, tell us about this deal. Michael Carro: Well, you know, it it's been seven years in the making. when FPL, formerly Gulf Power, so I had a relationship with Gulf Power that then transcended into Florida Power and Light. And so when they took over, they had reached out annually for me to kinda evaluate the building, you know, look at it and help them with what do I think the market value is for this asset? And and and these are things that I do for a lot of clients at no charge and So over the years I've been doing this. So finally they they decided they were gonna get serious and and likely put it on the market. And so when you're dealing with such a large company, it's never exact. It's never I'm going to do this. This is gonna happen. It's kinda like we're thinking about it. Right. And so they thought about it for a a period of time. and then I did a lot of work for them. And then they said, Hey, listen, we're gonna open it up to all the brokerage community to to bid on this and I was like, Well I thought I was you know so but that's fair and then and that's the right call. And so we had you know it was a good robust conversation and and valuations and stuff and ultimately I was awarded S V N was awarded the the listing of which we still had to keep it confidential because they weren't ready to go live. Right. So I got the listing agreement Rick Outzen: one of the biggest rumors in town had been going on for a while that that it was it was about to go for sale. Who was nobody I didn't I didn't know that you had it. No, Michael Carro: Well I don't talk about anything Rick Outzen: you know, so it was you know it was a lot of calling people. Yeah, I think I think it's gonna happen. You know, who who's got the list I d don't know what you know. So you know Florida Power and Light was very tight listed. Michael Carro: Right. And and listen, you know, in in real estate you don't talk about your deals. Right. I mean, you can talk about now when they're closed, but but really you just don't talk about because anything can happen. They certainly could have pulled it, but more importantly, when the client wants it to be highly confidential, you don't say a word. I mean, even those in my office don't don't n don't even know about it. And my wife is the funniest thing is She's though is the last person to know, even when things happen, because I just don't talk about it, you know? And so finally we get the green light to go live. certainly weren't allowed to do a lot of the normal listing activities, right? They really wanted it to be phone call, relationship related, but I could still reach out to corporations and and so you know, just like you would normally do, you know, I identified what I thought would be a top ten list of likely investors locally. likely investors in other cities, likely corporations. And so I proceeded to do that. But what what I think is fascinating is my very first phone call was the ultimate buyer. Wow. The very first phone call was the ultimate buyer. Now the wonderful thing is is we had a lot of competing offers. And and so that was something that kind of took us back. I mean the offers were were were robust they were they were they were solid We went out in a in a range, so the asking price was forty-two to forty-six million dollars. Now this asset is a 250,000 square foot office building, right? Five stories, and it sits on 13.38 acres. It is prime waterfront property in in our downtown Pensacola area. There is nothing like this. Right. Of all the listings I've ever had in my life, this was the one I wanted. Not because of the money and the commissions, although that was good. Right, right. but really because it it was such a special asset for the community and it has been so long and and the potential for this asset I thought was really, really great. And as somebody who does a lot of work in downtown, I live downtown, I invest in downtown, that this was important to me personally, that it that I was hopeful that we had the right buyer. And ultimately You know, it's gonna remain in local hands. We are converting it from a a corporate headquarters, a single tenant, one tenant building to a multi-tenant office building. We entertained several different options with the buying group of do we do a hotel on one floor, you know, condos on another, and you know so we entertained a lot of different things, but ultimately we landed on just keeping it a multi-tenant office building. And we closed on this asset on Friday. So it's really fresh. and so Well well I will say this. So it Rick Outzen: That's what got my attention. Michael Carro: the signs went up Friday. Friday, okay. So but what happened? So the seller would not let me put signs on the property even after the buyer's due diligence expired, meaning Huge amounts of money became non-refundable. The buyer's like, Mike, we want you to put signs up. Right. And I like, I know, but I don't work for you in this capacity. I have to wait for the the seller to give authorization. And they're like, no. Not until it sells. And I said, not until it closes. Right. And so and and and they, I mean, the the buyers were asking me daily, and I said, Well, I can't do it. So so certainly when we closed, and and and last week was a nice week. Th buyers signed on Wednesday. The the the documents were overnight to Juneau, Florida where f FPL is headquarters. They signed on Thursday. So it was all done and then it funded the next morning. I got a call from my client my my my seller at seven twenty one Friday morning, we're official. And so I called the sign guy and said, Now. They were ordered for Saturday. Right, right but I said nope, go today. that's great. And so we got up on on Saturday. I'm sorry, Friday afternoon. And now. Rick Outzen: So what what c w what can you tell us about the buyer and can you tell us what the the purchase price was? Michael Carro: I can tell you the purchase price because it is a it's it's a public number. Okay. So the purchase price was $41 million. Okay. it included all the FF and E. And there is a significant amount of furniture, fixtures, and equipment in that asset. It's it's kind of an unbelievable about. We heard from from one of the from somebody that the the furniture package was eleven million dollars. Now of course, you know, that's been depreciated down so it's not like it you could sell it today for eleven million dollars but it's but it Rick Outzen: Pretty I've I've walked through the building before. Michael Carro: And and you know, you you bring that up. So this building, it was built in nineteen eighty-six, but it has the effective age of being less than five years old. I mean, it's unbelievable how well they took care of this asset. New roof, three years old three years old. Two new air conditioning, they're really not air conditioning systems, they're they're towers that are less than three or four years old. I mean the systems in this building are unbelievable. Right. You know, it's crazy. And so but but when we when the when the buyers were moving forward, you know, one of the challenges in in office space is because all of these large cities that we see across the country have had a huge impact, negative impact on office space, financing doesn't exist. So this asset was being delivered vacant. Imagine a 250,000 square foot empty office building. And trying to get financing on it. I'm gonna tell you what the positive about Pensacola is our vacancy in in office space downtown is only four percent. Right. So it's good in our market, but banks don't just work in our market. They look at national. Right. And so we had a lot of banks look at this and said, I'm sorry, even if we wanted to, we couldn't. We will not finance office buildings like this. So that was the first big hurdle that the buyers ultimately overcame. And then w but part of the negotiation was that helped was F P N L said they're gonna stay on the fourth floor, so they're gonna maintain a presence Rick Outzen: That was question I had too. They're sort of an anchor for you. Michael Carro: They are absolutely an anchor. And they're such a good partner. But more importantly, from Rick Outzen: Pay their light bill. Michael Carro: they have this tribal knowledge of the building that if they were to have vacated, you know, hey, where is this? Where is that? I mean, think about a small building, still has complexities, right? The building you're in, it's not nearly as large, but if you if you owned it and left. I mean trying to get that knowledge is is really difficult. So the tribal knowledge of that will remain in the building is so valuable to the buyers. but then I hit the ground running to try to lease the building. And I'm gonna tell you, as long as I've been in this business, I'm completely surprised at the response. It has been overwhelming and it's been kind of on the down low. Now we've got a we are fortunate to have a great commercial real estate brokerage community in Pensacola. I mean our competitors, you know. Right. Obviously we're with SV and Southern, but NAI Pensacola, Sterling Properties, Neal and Company, I mean these great companies that we get to to work side by side with, those are my partners in filling up this building. Right. Rick Outzen: You've you know, out at the press release you had a a lot of space is already taken care of. We're we're running close on time, but the the and we'll have to do a sequel. But I think is it what can you tell us you know, you've said the buyers are local from here and and mobile. Michael Carro: That's right. Rick Outzen: You got about two minutes. Yeah. Michael Carro: So so I'm gonna tell you that the the buyer out of mobile is owns a lot of significant real estate assets. And the reason why that's important is because not even if you have the money, doesn't mean you can buy this asset. You need to have the ability and knowledge. So he has a construction company, a property management company, and a real estate company. So he has all of the things and the knowledge more importantly that he can invest into this building. Just Just the due diligence on an asset like this is hundreds of thousands of dollars and a heck of a lot of man hours. Right. Right. So even if you have a lot of money doesn't mean you should take down this type of asset without that type of experience in your back pocket. Rick Outzen: Yeah, and I think that gives you a huge advantage in doing this, Mike. So right now is when will people start moving in? That's that's is that Florida Power and Line? No. Already there, right. Michael Carro: We had our first tenant move in Monday. No, they were already there. So our first tenant moved in on Monday. They moved in to about eleven thousand square feet. We have another tenant moving in. Now these are signed leases. So at closing, I had a hundred and twenty-seven thousand square feet leased. Wow. Wow. I have one hundred and twenty-three thousand square feet left. Now let me tell you, if because I'm trading a lot of paper right now, doesn't mean any of these deals will happen. But if I If I signed a lease on all the paper I'm trading, I've oversold the building by probably 30,000 square feet. I'm negotiating about 150,000 more square feet, but I only have 123,000 a lease up. Now listen, not every deal is going to cross the finish line. But I'm not I will not be surprised at this point I would have been before if we're not 100% full in the next three to six months. Wow. Yeah, thank you so much. Rick Outzen: Wow. Well Michael, congratulations and thank you for sharing this with us. Yeah. and be able to have this on the show. We're going to take a break. We'll pay a few of our bills and we'll be right back.