Slabe Machine sells its land and main Willoughby facility | Crain's Cleveland Business

Slabe Machine's facilities in Willoughby

Slabe Machine Products in Willoughby has sold its headquarters and plant in a transaction priced well above the property's assessed value.

The sale of the company’s facilities, at 4559 Hamann Parkway, was listed on both the real estate data site CoStar and with the Lake County Auditor’s office. It was also highlighted in a recent email listing major recent real estate transactions from Newmark Vice Chairman Terry Coyne.

CoStar shows the property sold in May for $5 million to Tenet Equity Partners, a REIT based in Arizona. It did not give a specific date.

CoStar lists other industrial real estate in Willoughby selling for much less per square foot than what Slabe’s property fetched.

For example, the site of Ohio Broach and Machine Company at 35264 Topps Industrial Parkway in Willoughby is also about 50,000 square feet in size, sold for $1.75 million last year, according to CoStar data.

The Lake County Auditor sets the market value of the Slabe Machine site at $1.77 million, less than half of the $5 million reported sales price.

The property at that address includes Slabe’s 50,000-square-foot plant and headquarters and the 3.4 acres it occupies, according to CoStar data and Slabe’s website.

Slabe makes precision-machined parts for applications such as aerospace, medical devices and firearms, as well as for valves and bearings. One of its chief capabilities, according to its website, is the ability to make very small and precise parts.

“We are a global low-cost supplier of microscopic up to 15-inch (384mm) sub-assemblies, metallic and composite parts having tolerances to +/- .00005 (inch),” the company states on its website.

The company, founded in 1939 by Edward Slabe Sr., has about 125 employees, its website also states. It was run by a Slabe family member until last year, when Terry Kooyman was named company president after a seven-month stint as general manager, according to Kooyman’s LinkedIn page.

Neither Kooyman nor Tenet's representatives returned calls or emails seeking more information on the recent transaction.

The property's relatively high price indicates the transaction was potentially a sale-leaseback transaction, in which the resulting lease to Slabe represented as much or more of the asset value as the building and land.

Bruce Bender, chief investment officer at Royal Oak Realty Trust in Rochester, NY., said prices such as what the Slabe site fetched — about $100 per square foot — are often indicative of sale-leaseback transactions.

Royal Oak, an 11-year-old REIT with assets of $850 million, specializes in industrial properties, including in Northeast Ohio where it owns and leases space to King Nut in Solon, among others.

“You probably could get it vacant for $50 or whatever the number is, $75 per square foot,” Bender said. “At $100 per square foot, it feels like there’s a lease in place that’s generating revenue.”

Such transactions have become a common way for companies to turn their real estate into cash and capital, Coyne and other real estate professionals say, and typically fetch higher prices than other transactions because they come with a long-term lease and established tenant.

The story has been updated to include comment from Bruce Bender.