PHOTO / PETER VAN ALLEN
The sale of 1 Pleasant St. in Portland was the sell side of a 1031 exchange.
Updated: March 7, 2022
1031 exchange swaps Portland office for Lewiston and Rockland industrial space
Courtesy / Maine Realty Advisors
A 14,000-square-foot industrial building at 11 Fireslate Place in Lewiston was snagged for $950,000 in an off-market deal.
Industrial real estate beyond the Greater Portland market received a vote of confidence when a Maine investor swapped out a historic office/retail building at the edge of Portland’s Old Port for industrial properties in Lewiston and Rockland.
The swap was made under section 1031 of the IRS tax code, which allows investors to defer paying capital gains taxes on the sale of real estate by buying a similar property. Josh Soley of Maine Realty Advisors facilitated all of the transactions.
“With the advent of markets like cannabis, e-commerce and an influx of new startup activity in the state, industrial has been an incredibly good market,” Jim Henry, co-founder of Remington Street Properties, told Mainebiz.
Cinamon Building
In 2019, Jim and Rebecca Henry bought the Cinamon Building at 1 Pleasant St. in Portland for $1.95 million in an off-market deal. (It's named, not for the spice cinnamon, but for the original Cinamon family that owned it.)
The plan for the Cinamon Building, which overall was in good condition, was to perform some renovations based on tenant input.
The work included development of a fourth floor office suite for U.S. Sen. Angus King, I-Maine.
Additional renovations were planned. But after the pandemic hit, further development became challenging, said Henry.
The property didn’t officially go on the market, but Soley was aware that the Henrys were thinking about selling it.
“An opportunity came my way,” said Henry.
They sold the building to Zenith Operating Group LLC last November for $2.2 million.
He added, “It’s been an honor and an exciting time to be involved in Portland real estate. But it’s a very large state with a very robust real estate investment outlook. We decided we would try other areas. One of the areas is Rockland and another is Lewiston.”
Rockland
Remington Street Properties and Kent Farm LLC then bought a 93,860-square foot industrial building at 341 Park St. in Rockland from Maine Colloids LLC for $3.9 million. Tenants include International Flavors & Fragrances Inc. (NYSE: IFF), a New York City-based developer of value-added ingredients.
The building, on 4.5 acres, dates to 1979 and was renovated in 1996, with an addition built in 2013. Features include 20-foot ceilings.
Courtesy / Maine Realty Advisors
The buyer of 11 Fireslate Place also bought 341 Park St. in Rockland to fulfill the buy side of a 1031 exchange.
“I believe Rockland is the next Portland,” said Henry. “It’s kind of the center of the universe on the midcoast.”
Lewiston
Around the same time came the purchase of a 14,000-square-foot industrial building at 11 Fireslate Place in Lewiston from NuBentley LLC for $950,000.
The Lewiston building is occupied by Huhtamaki Inc., a global food packaging specialist headquartered in Finland.
“It was single-tenant net lease transaction,” said Soley.
The property wasn’t on the market. Soley said he came across it as a prospect when he was looking at a listed property.
“I went up there out of curiosity to take a look,” he said. “My strategy often, dealing with off-market properties, is you have to see everything.”
The building, on 6.7 acres, was constructed in 2010 for Huhtamaki. The seller is a Lewiston resident who held it as an income property, said Soley.
“It’s a pretty state-of-the-art property [with] polished concrete floors, wholly automated equipment,” he said.
Good timing
Soley presented the Lewiston property to the Henrys right around the time they were deciding to move along from the Cinamon Building.
“The timing couldn’t have been better,” said Henry.
The Henrys had previous investment experience in Lewiston with an early 20th-century office building called the Professional Building at 145 Lisbon St. They bought it in late 2019 for $505,000 and sold it a year later for $565,000.
“I think Lewiston is a great investment,” said Henry. “We’ve been really happy not only with the municipality but certainly with the opportunities.”
No further investment is planned for the Fireslate Place property.
“The building was built specifically for this tenant,” Henry said of Huhtamaki. “They’re a great tenant and they’re very independent, so we have a hands-off relationship. It’s their entire facility to use.”
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