December 24, 2021 — By Joe Clements (The Real Reporter)
BILLERICA, MA — RAM Cos. is ending this year on a high note-—and has another bell to ring in early 2022—-with the Maine-based investor and early adherent of suburban Boston flex/industrial finalizing the first of two trades Thursday as Davis Cos. acquiring a core-level, 91,700-sf building here along Middlesex Turnpike for $23.7 million backed by $8.6 million from Webster Bank . Next on the dais is 16 Elizabeth Dr. in neighboring Chelmsford, said to be under agreement at near $15 million, its purchase by the Shearwater Cos. portended to close in January.
CBRE Capital Markets is exclusive agent on both the completed and pending RAM listings. Calls to the brokerage contingent regarding those assignments were not returned as of press deadline, but team members are quite familiar with each in having introduced RAM to them in both instances. Along with Executive VPs Scott Dragos, Doug Jacoby and Christopher Skeffington, the CBRE crew features First VPs Anthony Hayes, Timothy Mulhall and Roy Sandeman and Vice President Daniel Hines. RAM Cos. paid $11.2 million for 16 Elizabeth Dr. in Sept. 2013 and another $10.7 million for Building 6 at 900 Middlesex Tpk. in autumn 2018.
“We are very excited to be taking on this property,” CEO Jonathan G. Davis tells Real Reporter, explaining the opportunity got his firm’s attention for multiple reasons as it sought to fulfill a 1031 tax deferred exchange program after cashing out on other regional assets in recent months. “It is a beautifully maintained building,” Davis observes of the facility whose occupant fills all of the space to June 2028. While the rent is said to be below market—(Davis would not discuss metrics)—he says it complements the firm’s flex/industrial portfolio north of Boston, a realm homegrown Davis Cos. has been active in dating back to the previous millennium.
While concurring competition is stiffer than ever out past Route 128, Davis argues the fundamentals for flex and research space in those submarkets “have never been more dynamic,” and with that backdrop, it was determined 900 Middlesex Tpk. was especially tantalizing due to specific elements including a “sticky” credit tenant, physical improvements made by RAM in its tenure, and the seller’s success extending ASM’s original lease five years beyond 2023 and exact a rent bump when it commences.
ASM NEXX Inc. is the subsidiary of a Singapore electromagnetic manufacturing company with investment grade credit which found its way to Billerica by way of a 2018 merger, with the occupying operation there since 2008. The tenant monies spent have yielded “critical infrastructure in the research and development” capabilities at the building, CBRE’s analysis outlines. By one account, Davis Cos. will enjoy a hike into the $17 per sf level sometime in 2023 versus a starting figure under $12 per sf reflecting the initial lease ASM signed in 2013. As a result, the capitalization rate going in on this week’s exchange may have dipped under 5 percent, according to sources, but will supposedly push back over 6 percent at some point in 2023.
Jonathan Davis re-iterated a belief in the area and asset. “We see a lot of vitality in that (Route 3) corridor from Route 128 in Burlington up to New Hampshire,” relays Davis. “We expect the flex and R&D market north of Boston will continue to improve and we are thrilled to be owning this asset which has a terrific tenant enjoying great success in an industry—the semiconductor industry—that continues to see growth . . . and we feel good they may even look to expand in that location beyond their” current commitment. The purchase price does reportedly include a piece of land that could increase the building footprint by upwards of 30,000 sf.
As to 16 Elizabeth Dr., there is no official confirmation, but the Shearwater Cos. of Raynham is supposedly the local investor which has tied up the 91,500-sf building. The firm led by the Ciffolillo family has several properties in a portfolio concentrated in southeastern Massachusetts. “They are branching out,” one CRE professional tells Real Reporter. Efforts to contact Shearwater by press deadline were unsuccessful.
Described by one source as “two peas in a pod” in an earlier article about RAM peddling the assets, 16 Elizabeth has almost the exact same footprint as 900 Middlesex Tpk. and is also endowed with a committed tenant who, like ASM, has poured substantial sums into its space, in the case of 16 Elizabeth Dr., over $4 million is tabulated in the CBRE analysis. Arrow International has occupied 16 Elizabeth Dr. for eight years, its parent Teleflex Inc. is tethered to the building under a triple-net lease similar to that at 900 Middlesex Tpk. terms which favor the landlord in limiting upkeep of the physical plant and other matters.
As to RAM Cos., the Scarborough, ME-based investor founded by outlet retail pioneer Howard A. Goldenfarb will apparently come out ahead on both of its latest industrial transfers, a pattern exhibited in numerous previous Real Reporter articles documenting the company’s success in the suburban flex/industrial platform managed in the Bay State by industry veteran Brian A. Gagne. While agreeing the firm has been more active on the sell side, one market veteran insists RAM is still mulling prospects to acquire as they appear, but that source points out the ability to land assets with upside is becoming more challenging. “Everything is a battlefield for (flex/industrial) right now,” says the source.