Australian firm buys Boxwood Amazon plant for $392M
NEWPORT – An Australian real estate investment firm has acquired the recently opened Amazon Boxwood plant, which is Delaware’s largest building, for a reportedly record-setting price.
Macquarie Asset Management Real Estate, based in Sydney, acquired the plant known as Amazon MTN1 this month from Nevada-based distribution and industrial developer Dermody Properties, according to a release from the firm. A deed transfer was not recorded in New Castle County as of Tuesday, according to county land records.
The purchase price was not disclosed, but Macquarie said in a press release that it is the largest acquisition to date made by a U.S. investment account managed by Macquarie’s U.S. core/core-plus real estate team. The institutional investment firm apparently bought out the original investors on the limited liability company connected to the property, DPIF2 DE 1 New Castle LLC, as Dermody will remain involved.
According to sources with knowledge of the sale, however, the building traded for about $392 million, which would smash the record sale for a Delaware building and top all single industrial asset sales in the U.S. last year. The sale would translate to a price per foot of $818. The largest single commercial sale in at least a decade in Delaware was the $83 million sale of the Cristina Crescent to Barclays Bank in Wilmington’s Riverfront last year.
At 3.8 million square feet over five levels, the facility looms over the Newport area just southwest of Wilmington off Route 141.
Originally a General Motors assembly plant, the facility closed in July 2009 and failed to be restarted under a proposal by electric car maker Fisker. Chinese company Wanxiang purchased all of Fisker’s assets for $149 million at a December 2013 bankruptcy auction, acquiring the Boxwood site in turn. After sitting vacant for several years, Wanxiang began marketing the 142-acre property once again, which caught the attention of Harvey, Hanna & Associates, the Newport-based real estate developer.
“Dermody Properties looks forward to continuing to manage the property on behalf of Macquarie as we continue our long-term commitment to the project. In addition to the adjacent delivery station, we continue to invest in New Castle County with our project on Jamison Corner Road and are currently exploring several other opportunities throughout Delaware,” Dermody told Delaware Business Times in a statement.
After investigating its potential, the local firm bought the site for about $10.4 million in October 2017, according to county land records. After razing the land, remediating the environmental concerns and securing the entitlements, Harvey Hanna sold the project to Dermody for more than $31 million in November 2019 and February 2020.
Dermody was able to attract the e-commerce giant Amazon to the land, due to its proximity to local highways, and the company leased two facilities at the site, including the now sold mega-plant.
“This is a highly efficient fulfillment center format in a strategic location which provides access to more than 17 million people within a two-hour drive,” said Christopher Quiett, head of U.S. Core/Core-Plus Real Estate at Macquarie Asset Management, in a statement announcing the acquisition. “We’re delighted to be able to expand our portfolio with another signature logistics asset.”
Amazon signed a 20-year lease with Dermody for the Boxwood facility, which opened in September. The lease contains five additional renewal terms of five years each, meaning that if fully executed, Amazon could remain at the facility under the current lease until 2066. Each of the renewal periods are set at 95% of fair market value and Amazon holds a right of first offer to buy the site should the owner ever want to exit the property.
Amazon-leased facilities have been commanding much higher values over recent years, as investors are confident that Amazon will remain a committed tenant for many years. Just this week, a comparatively tiny 120,000-square-foot facility leased to Amazon in Conshohocken, Pa., broke regional industry per square foot sale records when it sold for $97 million. Meanwhile, a Virginia investment firm paid more than $326 million for a 2.69 million-square-foot Amazon plant near Des Moines, Iowa, this month.
The MTN1 facility, known in Amazon parlance as an AR Sort FC, or Amazon Robotics sortable fulfillment center, is part of a growing high-tech expansion for the company. It is one of a half dozen or so nearly identical multistory facilities being built by Amazon across the country right now.
Macquarie, which has about $12.4 billion in global assets under management, has been growing its presence in the United States, acquiring properties in New York City, Phoenix, Seattle and the greater Washington, D.C., area in the last quarter.
Editor’s note: An update to this story reported that real estate transfer taxes were not paid on the sale because the ownership LLC had not changed. That is incorrect, as the transfer tax applied to a change in ownership stake. We regret the error.