Pennichuck puts office park, real estate on the market

While it says it’s not looking to get out of the real estate business, Pennichuck Corporation has put up for sale its one developed property, Heron Cove Office Park in Merrimack, which houses such tenants as Fidelity Investments and Raymarine Inc., the water utility disclosed in a Securities and Exchange Commission filing.

The Nashua-based utility’s Southwood Corp. subsidiary, which owns the buildings in a 50-50 partnership with The Stabile Companies, is seeking bids on the 150,000 square feet of office space — without giving out an asking price – in the hopes of closing on a deal at the end of the year.

The town assesses the parcels, located on Manchester Street across from the YMCA, for $13.67 million, though in commercial real estate, such assessments rarely coincide with the sale price, stressed Duane Montopoli, Pennichuck’s chief executive. The partnership owed a $10.8 million mortgage on the property, with Southwood being on the hook for $3.8 million, according to the SEC filing.

“Now is a smart time to extract value for developed real estate properties,” said Montopoli.

Although the Pennichuck’s quarterly filing said that lease income was down from the property due to several vacancies, Montopoli stressed that the report covered an earlier period and is now fully leased.

The partnership is marketing the property through Cushman & Wakefield, along with an undeveloped 27.23-acre parcel owned entirely by Southwood that is now in current use. On its Web site, C&W is asking for $1.5 million for the land, which it also hopes to sell by year’s end.

The company said it has received all necessary approvals for phased developments of up to 110,000 square feet of commercial office space.

While the office park consist of Pennichuck’s entire developed portfolio, it represents a small fraction of the land owned by the company. Pennichuck – which is locked in an eminent domain battle with the city of Nashua – has no intention of leaving the real estate business, Montopoli said, despite language in the quarterly statement that said it “expects to pursue the efficient and orderly liquidation of our land portfolio.”

Such language has been in the company’s SEC filings for years, and simply means that the company occasionally extracts value for its land holdings, Montopoli said.

Heron Cove Office Park was built and developed by Stabile in partnership with Southwood between 1999 and 2001.

Tenants should see little change if and when ownership changes, said Norm Bourbeau, of Stabile Property Management. Indeed, he said, Stabile will seek to continue to manage the property should it change ownership. – BOB SANDERS