News
SHRIMP HOTEL TIME
March 8, 2011
| The Gorins have been in Boston CRE for 101 years, but never before has Roz Gorin (the latest in the family to run HN Gorin) developed a high-end fish freezer. In today's office market though, she says her new ?shrimp hotel? has the sweet smell of success. Six months ago, she would have considered that idea absurd. |
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| We snapped Roz in front of the Warhols hanging in her lavishly appointed Back Bay office. In her hunt for deals, she tells us theBoston offices she used to buy and build are a stretch. The 5% or 6% cap rates others are paying won't get her to the return she wants: at least double the rate on a 10-year Treasury note. She doesn?t expect a flood of distress deals. Meanwhile, permitting a downtown or suburban office building without a tenant is toorisky; for a $25M to $40M office, she?d have to put up roughly $500k to $1.5M. To get financing, she?d need to put up 35%. All in, that's about $15M in cash to get started, a hefty tab. |
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| CFO Kristian Gibson says the ?shrimp hotel?, a 9M cubic SF freezer for high-end fish in Elizabeth, NJ makes surprisingly good financial sense. Preferred Freezer, the company that designed the facility to keep tasty morsels like lobster fresh and safe, is overseeing construction by Campanelli and then will pay rent to Gorin. With a one month minimum stay, sometimes occupancycan be greater than 100%. If one customer vacates a space prior to 30 days, another can rent it. This may seem like a weird deal, but Roz tell us she can make a very good return. She calls this an industrial property but says in fact, the deal may just be a financialtransaction. |
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| Roz, here with long-time property manager Kim Paikos, says that the fish freezer tells her a lot about the Boston developmentscene. While she loves to build and buy offices, she says she's not sure if or when such opportunities will return. Her immigrant grandfather got the family into CRE in 1909 buying multifamily housing in Woburn. Her father then built a 4.5M SF portfolio of downtown offices including Ten PO Square and 75 Federal St. She developed the 900k SF 101 Federal in ?89. |
