Courtesy / Northland Enterprises
Josh Benthien.
April 15, 2022
A Gorham industrial property with long-term tenant acquired by Portland investor
Courtesy / Malone Commercial Brokers
Seller Clean-O-Rama PG LLC obtained a leaseback for its janitorial supply company, as part of the building’s sale to Northland Enterprises.
A long-term tenant and a well-kept property were prime selling points for an industrial building in Gorham.
Northland Enterprises, a commercial real estate developer and manager in Portland, bought 12 Bartlett Road from Clean-O-Rama PG LLC for its list price of $3.75 million.
Brandon Mitchell and Mark Malone of Malone Commercial Brokers brokered the transaction.
Mitchell had an ongoing relationship with Clean-O-Rama, which both owned and occupied the building.
When he learned that Clean-O-Rama was looking to sell the property, he said he immediately alerted Northland Enterprises CEO Josh Benthien, who had been looking for an acquisition opportunity to add to his portfolio of commercial investments.
Mitchell said he envisioned the deal as mutually beneficial for both parties.
“As soon as I heard this project was coming on the market, I made sure they [Northland] were the first to see it,” Mitchell said. “With such a quality tenant and the immaculate condition of the facility, we knew it would go fast. Northland jumped on it and wrote an offer that day.”
Opportunities for growth
The building, located in of Gorham’s industrial corridor, comprises 20,600 square feet of Class A warehouse space that includes office space, an additional 5,000-square-foot mezzanine and capability of up to 9,600 square feet of additional space.
The property is 100% occupied by Clean-O-Rama, a janitorial supply founded in 1964 by Paul and Jeanette Sferes.
Clean-O-Rama remains family-owned and –operated and supplies commercial cleaning products and customized training programs for schools, hospitals, and businesses throughout northern New England, according to its website. The company carries over $1 million in inventory and more than 5,000 products in 30 different categories. The large inventory is designed to allow for flexibility, choice and accurate, on-time deliveries.
Clean-O-Rama’s current owner, Phil Sferes, said the decision to sell the building to Northland allows the company to keep a strong presence in Maine for the long term, as well as open new opportunities for growth in Maine and beyond.
“It was important to stay in the building, and to not cause any disruption for the employees working out of the Gorham location,” Sferes added.
Long-term relationships
Northland specializes in build-to-suits and sale lease-backs, with a long-term investment philosophy, said Benthien. Northland has increasingly focused on the industrial and manufacturing sector.
“When we acquire a building and sign a lease, we do so with the expectation that we’ll be partners with that tenant for 10 years or longer,” he said.
The goal is to design a building and long-term lease that will allow tenants to operate efficiently and cost effectively to facilitate the company’s growth, he said.
“While the acquisition at 12 Bartlett isn’t a ground-up development, we were able to work with the team at Clean-O-Rama to ensure that we crafted a lease structure that met the same standards as our build-to-suit projects,” he said.
A sale with lease-back and a build-to-suit are similar, he said, in that both provide the tenant and the landlord an opportunity to vet each other and verify that they share the same long-term goals and operating philosophy.
“I would say that in the case of 12 Bartlett, that was a valuable, and ultimately satisfying process for both sides,” he said.
The building dates back to the mid-2000s and was built by Clean-O-Rama, said Benthien.
A 10-year leaseback with the company secures its long-term tenancy and allows it to pursue company growth, he said.
“They picked their landlord, essentially,” he said.
As a relatively new build, he said, the building compares well with older industrial stock in the region. Features include high ceilings and excellent mechanical and loading dock systems.
The purchase helped fulfill a section 1031 exchange under the IRS tax code, which allows investors to defer paying capital gains taxes on the sale of real estate by buying a similar property.
In this case, the sale side of the 1031 occurred earlier this year, when Northland Enterprises sold a data center building at 340 Cumberland Ave. in Portland to Deep Edge Realty, a Boston internet company. Northland continues to provide property management services there.
“I look at the Gorham building as a really high-quality industrial building in a great community that has a lack of available industrial space,” he said. “Even if Clean-O-Rama outgrows the space down the road, and hopefully we can be part of helping them find a bigger space, it will be a building that’s easy to fill.”
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