In 2019, Nessel Development acquired 127 Park Avenue—a fully leased, 157,267-square-foot industrial property in East Hartford, Connecticut. The primary tenant, Bakery on Main, occupied over 70% of the space and had heavily customized the facility to meet their bakery manufacturing and assembly-line requirements. This extensive build-out, including bolted-down equipment and specialized production lines, made it virtually impossible for the tenant to relocate—a key factor in stabilizing the investment.
Bakery on Main, originally a family-run business, was in the midst of transitioning to private equity ownership. The infusion of strong capital and the appointment of new leadership signaled the company’s commitment to scaling its operations. While ownership transitions can sometimes introduce uncertainty, this shift provided greater assurance of the bakery’s long-term viability and financial stability.
When we acquired the property, Bakery on Main was paying significantly below-market rents. Recognizing this upside potential, we structured the investment to capture substantial rent increases upon lease renewal—driving both higher cash flow and a marked increase in the property’s overall valuation.
Bakery on Main’s massive equipment outlay and space reconfiguration included specialized walls, floors, and drainage systems designed to facilitate high-volume food production. Their capital commitment reduced the likelihood of vacancy or turnover, effectively locking in a reliable tenant for the long haul.
Upon renewal, we successfully raised Bakery on Main’s rent to market levels, substantially increasing both the property’s net operating income and its overall market value. Combined with the tenant’s strategic upgrades and the robust financial backing of private equity, this acquisition exemplified how our mission-driven real estate approach capitalizes on tenant transitions and property enhancements—ultimately generating strong returns for our investors.
Negotiating a new lease structure that would bring rentals up to market rates at renewal, significantly boosting income.
Confirming the bakery’s financial strength post-acquisition, backed by private equity, and leveraging their anchor status.