Solution Center was purchased by Hayman Properties in September of 2013. The asset was purchased as a lease-roll play.
The asset is a high quality, class A 100,900 sq. ft. office building located in what is also called the “Silicone Slopes” area of Lehi, Utah. Lehi is perhaps the strongest leasing market in the overall Salt Lake City area. Solution Center was purchased under replacement costs with an in-place cap rate of 9.11. The higher than average market cap rate (market for similar product averaged between 7-8) was due to risk that the property might lose its largest tenant (at 55,000 sq. ft.) as early as June of 2015. Fortunately, Hayman Properties negotiated a 5-year income guarantee from the seller for the at-risk space, thereby substantially mitigating risk of turnover in the space. Hayman Properties expects to deliver in excess of a 20% IRR for this investment, regardless of tenant turnover.
Solutions Center is characteristic of Hayman Properties’ ability to mitigate risk through thoughtful planning and implementation, without sacrificing expected returns.