St. John Properties is seeking an equity partner for the lucrative 2 million-square-foot office complex under construction outside the gates of Aberdeen Proving Ground in Harford County.
The Baltimore County-based developer hopes to raise cash for future acquisitions, an executive said Wednesday.
St. John gained the exclusive development rights in June 2009 from the U.S. Army after the original developer, Opus East LLC, plunged into financial crisis and was unable to build the office park as BRAC was ramping up at APG and thousands of new workers and defense contractors were preparing to move to the base.
Since then, St. John has invested more than $30 million and built nine buildings as part of the 416-acre GATE, an acronym for the Government and Technology Enterprise Enhanced Use Leasing project, now known as the GATE Office and Technology Park. A 10th building is expected to open in November, and two others have broken ground at the complex.
Ninety percent of those buildings are leased to 39 companies, including Raytheon, Boeing, L3, SAIC and CACI, said Matthew F. Holbrook, regional partner at St. John and a former Opus employee.
Overall, the project has the potential for a total of 35 buildings and up to 18,000 jobs.
“This is the largest government-related real estate opportunity in the state of Maryland in a long time,” Holbrook said of the offering that launched last month.
Holbrook said St. John is seeking to offer up to 90 percent of its holdings in the GATE development to an equity partner, which he said could be comprised of a cluster of investors.
“We’re keeping a pretty broad offering as to what we’re willing to consider,” he said. “We want to stay involved, and we’re still going to be in control.”
So far, more than 20 companies have inquired about the equity offering, Holbrook said, but he declined to name them. He did say they included pension funds, national developers and investors from New York.
“We see it as an opportunity where there’s demand in the investment markets for a yield, and if we were ever going to do it, it is the right time,” Holbrook added.
“Internally, the reason why we’re doing it is to diversify some of our risks and put money back in our war chest for more investments. We continue to look for other acquisition opportunities.”
There is no set deadline for offers, Holbrook said, but partnership decisions could be made by top executives led by Edward St. John, the company’s founder and chairman this fall.
St. John said in 2009 that the GATE deal was “the most significant commercial real estate opportunity in the history of our company.”
A Mount Saint Joseph High School and University of Maryland graduate who began the company 41 years ago, St. John said in an interview with The Daily Record in November 2011 that he originally put up $2 million in cash to receive the development award from the Army.
“It was just like going to Las Vegas and putting up $2 million on a roulette wheel,” he said then. “It was that kind of gamble.”
Bo Cashman, senior vice president at CBRE, the agent handling offers for the equity partnership, said Wednesday the reaction so far has been positive.
“We’ve really received attention from the national investor pool as opposed to local or regional investors because of the sheer scale of it,” Cashman said. “In this low interest rate environment, people are looking for a low-risk yield, which this opportunity does present.”