Tempus Realty: Its Time Is Now

Dan Andrews is in road warrior mode during late January and much of February. The managing partner of Little Rock’s Tempus Realty Partners is jetting around on a whirlwind tour of 31 commercial properties scattered across the country.

His four weeks of travel to get better acquainted with pending acquisitions will take him in a swing around the compass from Tulsa to Savannah, Georgia, to Philadelphia and Buffalo, New York, to Indiana, Ohio and Michigan and on to Phoenix, Tucson and Las Vegas.

“All told, we have about $150 million of deals in the hopper that we’re working on,” Andrews said.

Not counting these deals, the estimated value of the Tempus Realty portfolio of industrial and office projects stands at about $375 million after the company sold nine properties in transactions totaling $165 million.

Included among pending deals is a regional headquarters in Minnesota, a buy that will close in the high $20 million range. “That’s one that will really open some eyes,” Andrews said.

All these soon-to-be purchases, scheduled for completion in stages during the next eight to 12 weeks, will start 2022 off and running for Tempus Realty after it ended 2021 with a double bang.

In December, the private real estate investment partnership sold five commercial properties with a combined 875,208 SF in deals totaling $64.9 million and bought three industrial properties, a combined 610,120 SF, for $83.5 million.

The three buildings acquired in Auburn Hills, Michigan; Westland, Michigan; and Jackson, Tennessee, house operations of US Farathane, a designer and manufacturer of highly engineered plastic-fabricated parts.

On the sold side of the ledger were four industrial properties in Statesville, North Carolina; Anderson, South Carolina; Portland, Tennessee; and Oshkosh, Wisconsin; along with an office property in Charlotte, North Carolina. Tempus bought them between 2016 and 2020 in te transactions totaling $44.9 million.

The second year of the pandemic proved to be busy for Tempus Realty. During 2021, the venture bought 19 industrial and office buildings totaling nearly 2.2 million SF in a string of deals totaling $184.8 million. It was the group’s most active year since its 2016 formation.

“In terms of dollar value, for sure,” said Isaac Smith, executive vice president and principal at Colliers International Arkansas. “Everything kind of came together. “Uncertainty over changes in capital gains taxes and favorable interest rates helped create activity, both buying and selling. We were able to take advantage of both dynamics.”

Smith is one of four partners in Tempus Realty. In addition to Andrews, they are Kevin Huchingson, CEO of Colliers International Arkansas, and Mark Saviers, partner with Cushman & Wakefield/Sage Partners in Rogers.

They hit the road together to inspect some of the group’s prospective property across the South last week.

“It was real positive and real productive,” Huchingson said. “We won’t do a deal till we get our eyes on the property.”

Tempus launched in 2016 with an initial capital raise of $18 million to leverage for a $36 million acquisition. Since then, the group has raised about $200 million as equity to purchase $450 million in assets spread over 25 deals in 15 states.

The $150 million worth of deals now in the works combined with the retained properties will push the count into new territory. “We’ll end up having about a half-billion dollars in assets under management,” Huchingson said. “It’s really driven by opportunity.

“We made hundreds of millions of dollars in offers about three years ago and didn’t really close a lot of deals. All of a sudden, we’ve gone on a run.”

Arkansas Ownership

Headquartered on the seventh floor of Building 1 on the former Alltel campus in Little Rock’s Riverdale area, Tempus has three staffers: Clay Ramey, analyst; Brad Runsick, asset manager; and Cindy Green, office manager. “We really enjoy our time together,” Andrews said of the staff, partners and investors. “That’s important to the results too when you enjoy what you’re doing.”

As the number and size of the deals have grown, so has the headcount of investors. These days, the group’s census of about 200 investors is overwhelmingly dominated by Arkansas players whose individual stakes range from very small to quite substantial.

“So much of what we do is based on our partnerships,” Andrews said. “The ecosystem of partners is what makes all this happen. That’s something that’s been very interesting to me, the backgrounds of our partners: doctors, lawyers, people from a lot of different fields who are successful.”

Tempus’ success story features a string of investments with attractive profitability metrics in terms of internal rate of return (IRR) and multiple of invested capital (MOIC).

Biggest IRR: 62.6% on the 486,000-SF Hoffmaster facility in Oshkosh, Wisconsin, bought for $23.7 million and sold for $32 million.

Biggest MOIC: 2.08 on the 72,786-SF Kimball Place in Boise, Idaho, purchased for $7.8 million and sold for $16.2 million.

“We’ve tried not to put a minimum investment limit on deals,” Huchingson said. “We want to provide opportunity, from small to significant. We want to be inclusive.

“What we’re able to provide our friends and local partners is nonrecourse debt on commercial property diversified geographically and by product type.”

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Selection of Tempus Sites

Tempus USF, Detroit & Jackson, Tennessee
Acquisition Date: Dec. 20, 2021
Building Type: Three industrial properties
Purchase Price: $83,500,000
Net Rentable Area: 610,120 SF
Occupancy at Close: 100.00%

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Tempus Grand Rapids, Michigan
Acquisition Date: July 9, 2021
Building Type: Nine industrial properties
Purchase Price: $42,140,640
Net Rentable Area: 784,608 SF
Occupancy at Close: 100.00%

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NWA Auto, Bentonville & Springdale
Acquisition Date: Feb. 26, 2018
Building Type: Three auto dealerships
Purchase Price: $35 million
Net Rentable Area: 110,715 SF
Occupancy at Close: 100.00%

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Impetus: Sale of Drugstore Chain

The seeds of creation for Tempus trace back to 2013 and the $438 million cash sale of the Stephen L. LaFrance Holdings Inc.’s regional drugstore chain, which encompassed the USA Drug and Super D Drug chains, to Walgreen Co. of Deerfield, Illinois.

Walgreen bought the business associated with the 141 stores but none of the real estate. Much of the property was owned by the LaFrance family.

“They kept all the real estate of what they owned prior to the sale to Walgreens,” Andrews said. He was vice president of accounting at USA Drug then and has continued his work for the LaFrances.

“Job No. 1 was to diversify. They had a lot of cash to invest and redeploy. We found ourselves focusing increasingly on real estate. Now it’s their primary business.”

The LaFrance family’s ongoing interest in real estate investing gave life to Tempus as a platform to continue investing in real estate, a vehicle for quality investments that provided opportunities for others.

“The LaFrances are the key to the creation of all this,” Andrews said. “They got the ball rolling, and they round out the capital needed in any deal. Our partnership group and the LaFrances will be at least 10% [investors] but never more than 40%.”

Looking deeper into 2022, what does Huchingson see for Tempus?

“I’d anticipate it being a bigger year,” he said. “Our average deal size is growing. I think it would exceed last year’s total. But it’s not really about how big a deal is. We’ll keep doing it as long as we can create value for the investors.”