One of the truisms in the commercial real estate brokerage business is that small, seemingly simple deals often wind up taking as much effort and ingenuity to close as larger, more complex transactions.
For a real-life example of this phenomenon in action, look no further than at a recent sale-leaseback/1031 Exchange deal recently brokered by Newmark Managing Principal Chuck Tabone and Managing Director Daniel Gazzola.
A complex series of events triggered by this transaction began in February 2006 when George Ciunga, owner of A&G Heat Sealing Corp., a manufacturer of heat sealing equipment, decided to retire.
Ciunga wanted to sell the 12,000-square-foot building at 205 Marcus Boulevard in Hauppauge Park that had housed his business since 1980. Represented by Tabone and Gazzola, he put the building under contract to Mobileistic, a fast-growing wholesaler of cell phones and wireless communications equipment. At the time, this company had been looking for a larger location in the Hauppauge Park market – represented by the same Newmark duo.
And then Ciunga changed his mind about retiring. His business was picking up dramatically, and he decided he wanted to find a space to lease in order to continue operations.
With about 45 days left before the sale of Ciunga’s building to Mobileistic was set to close, Tabone and Gazzola instituted a whirlwind search for a leaseable space. There was space available, according to Gazzola. But Ciunga - who had not paid any rent since the 1970s - “got a bad case of sticker shock when he saw where lease rates were,” he said.
The space search was changed to focus on buildings for sale, but most of the buildings available in the marketplace were too large for Ciunga’s business. At close to the last minute, though, Tabone and Gazzola uncovered an opportunity at 10 Colt Court in Ronkonkoma.
Owner/occupant John Geiger of Car-Lin Holdings, a printer, had put his 12,400-square-foot building on the for-sale market, listing it with Bob Liano of ReMax North Shore. He was uncertain of when he actually wanted to move out of the facility, though.
This opened the door for Tabone and Gazzola to put together a deal that fit the needs of all parties involved. They negotiated a sale/leaseback deal where Ciunga would purchase 10 Colt Court and lease half of it back to Geiger - and get the right to occupy half the building immediately upon execution of the sales contract, as opposed to after closing. Then, once the sale of 205 Marcus to Mobileistic closed, Ciunga closed on 10 Colt Court as part of a 1031 exchange transaction.
What started out as a simple user-building sale wound up being a complex transaction with several parties involved over a four-month period. “There were a lot of ‘moving parts’ that had to all come together at the same time,” Gazzola said, “but everything eventually worked out well, and everybody is happy with the results of the deal.”
New York-headquartered Newmark and London-based partner Knight Frank operate from over 140 offices in established and emerging property markets on six continents. Last year, we handled transactions valued at over $41 billion with annual revenues of over $545 million. With a combined staff of 4,500, this major force in real estate is meeting the local and global needs of owners, tenants, investors and developers worldwide. For further information, visit www.newmarkkf.com.