Courtesy / Compass Commercial Brokers
Seen here is the Wharf Street side of 416-420 Fore St.
Updated: November 23, 2020
Long-term leases in classic Old Port building attract 1031 tax exchange
Courtesy / Compass Commercial Brokers
Fully leased ground-floor retail and upper-story residential spaces were part of the attraction for the buyers of 416-420 Fore St. in Portland.
Long-term leases by restaurants and other businesses in an older building in Portland’s Old Port proved attractive to a couple seeking a new investment after they sold their Wells campground.
Lee and Jason Talevi bought 416-420 Fore St. from 416 Fore Street LLC for $4.095 million.
Mackenzie Simpson and Joseph Porta of Porta & Co. represented the buyer and Steve Baumann represented the seller in the transaction, which closed Sept. 30.
The property consists of ground-level retail storefronts and three upper-story residential units. A reference in the 1924 Portland tax records says that, at that time, its age was 50-plus years. It was owned in 1924 by Louis Matson, who had a short-lived pre-Prohibition brewery in the building in 1915, according to separate references by mainememory.net and oldbreweries.com.
Over the past 20 years, Baumann has brokered the property over the course of two ownerships.
The seller in this deal, said Baumann, was a local investor partnership that included Jonathan Cohen, who developed WEX’s new headquarters in Portland’s East End and is developing a 275,000-square-feet 100 Fore St. mixed-use project across the street, among other projects.
The building is bounded on the northwest side by Fore Street and on the southeast side by Wharf Street, which provides a lower-level commercial space.
“The interesting thing about this building is you have retail on both sides, so it’s that much more valuable,” Baumann said.
The lower level of the building suffered a fire about 10 year ago. Cohen and his partner bought the building in 2014 and conducted an extensive renovation that included repointing the brickwork and installing new electrical and sprinkler systems, and high-end kitchens in the residential units, said Baumann.
The residential units features original beams and brickwork, and vaulted ceilings.
Cohen and his partner decided to sell the building as part of an exchange under section 1031 of the IRS tax code, Baumann said.
A 1031 exchange allows an investor to defer paying capital gains taxes on the sale of real estate by buying a similar property.
Baumann listed the property about a year ago, but the partners waited for the right buyer, he said.
“They weren’t anxious to sell it,” he said. “They had a good relationship with their tenants, so they wanted to make sure the tenants were going to an investor they feel comfortable passing the building to.”
Numerous offers came in, primarily from Greater Portland investors. Ultimately, the buyer paid the list price.
Courtesy / Compass Commercial Brokers
The interior features original brickwork and beams.
“That was a very strong number for downtown,” Baumann said of the $4.095 million. “I don’t see a lot of investors budging on pricing, not even through the pandemic. Residential folks still need places to live, and the businesses in there have been there quite a while and are there for the long haul.”
10-year leases
Simpson noted the attractions of the building included the 10-year leases held by the three hospitality businesses — the Mark’s Place nightclub, Old Port Slice Bar and the tavern Portland Mash Tun. The three upper-story residential units are also occupied.
The buyers were looking for their own 1031 exchange.
“This was one of a few that we identified for them,” he said.
“We are excited about our next chapter in the Portland real estate market,” said Lee Talevi.
The Talevis are native Mainers. Jason grew up in Cape Elizabeth and Lee in North Berwick. They live in Wells, where they owned the Sea-Vu West Campground, an RV resort with 264 sites on 43 acres that they began building 16 years ago. They sold the business in August.
Courtesy / Talevi Family
Lee and Jason Talevi
“We’ll miss it,” said Lee. “But we’ll do something else. We want to give ourselves a bit of time to figure that out.”
When they sold the campground, they identified the Old Port as a great investment possibility.
“We’ve always loved Portland,” she said. “Because we were in the tourist business, we would always send people to Portland. If we wanted to go out for a good meal or for the day, we would often go to the Old Port.”
The couple also identified retail and residential as a good mix of uses, rather than office space, given the uncertainties of future office operations due to the pandemic.
She added, “We were new to this type of commercial product. Porta & Co. was amazing to work with.”
An inspection found the building “is amazingly well kept up,” she said. “And it’s super cool inside — exposed brick, huge beams. It’s quintessential Old Port architecture.”
“You can’t recreate these properties in the Old Port,” said Baumann. “They’re gems.”
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