Occidental Management buys Sprint campus
Occidental Management chairman and CEO Gary Oborny prefers not to describe his deal to buy the Overland Park-based Sprint campus as difficult or overwhelming.
That’s even though it’s the third-largest corporate campus in the country and — with 3.8 million square feet of occupied space and a million square feet available to develop — it’s almost three times Occidental’s existing portfolio of 1.7 million square feet.
“The word I would choose is ‘challenging,’ ” Oborny said.
He said the deal, which closed Tuesday for an undisclosed amount, is “obviously a sizable step up” for the mostly local and regional Occidental.
The property is appraised for more than $342 million.
“It was the right project at the right time for our company maturity,” Oborny said. “This clearly puts us on a national platform.”
The company’s first national-level deal — its 2014 purchase of the Overland Park International Trade Center across from the Sprint campus at 115th and Metcalf — is part of what positioned Occidental for this latest deal.
The OPX property, as it is now known, is about 750,000 square feet, which Occidental redeveloped into Class A office space.
“As we redeveloped that property and got to understand Kansas City and what our opportunities might be, we started looking at potential acquisitions that we could have a development or redevelopment component on,” Oborny said.
He and Occidental president Chad Stafford began to hear talk that the Sprint campus might come on the market.
“A number of very large national real estate investment companies had interest,” Oborny said. “Some of them the largest players in the U.S.”
Stafford said initially there were about 50 groups that showed interest, and Sprint “whittled that down to a smaller number.”
Occidental’s presentation was an opportunity for Oborny and Stafford to share their philosophy on real estate ownership.
“We’re a long-term holder of real estate assets,” Oborny said. “I think they wanted somebody who had a long-term approach to the campus.”
One thing in Occidental’s favor is the company is about the closest to a local owner as Sprint could get.
“They’ve already shown that they’re committed to this market,” said Barbara Mellott, Sprint communications manager.
“Sprint employees have a lot of pride in our campus,” she said. “We were looking for somebody who would make a commitment to the campus that was as strong as ours has been. If you will, the right caretaker that would take it to the next level.”
The almost three-decades-old campus needs some upgrading, and Mellott said it was important to choose a landlord — Sprint is leasing about a million square feet and may take more in the future — that shares the company’s vision of innovation and collaboration.
Last fall, Sprint began renovating some buildings at the heart of the campus that “were a little shopworn.”
Mellott said the company designed an open environment to create a more energized, vibrant space that was more collaborative than it had been.
“Sitting in a cube, you have to make an effort to see one another even if they sit feet from you,” she said. With an open environment, “It’s very easy to get things done quickly.”
Sprint also used more modern materials instead of the heavy wood and marble that had been in the buildings.
Oborny and Stafford “support that much more modern approach,” Mellott said.
“Really, they met all of Sprint’s needs, including the right price, but also . . . they support our plans,” she said. “It was important to choose the right partner.”
Sprint’s decision to sell “was about the changing business” of technology, Mellott said.
“We don’t need to be in the property management business. That’s not our core strength.”
It’s one of Occidental’s, though.
Oborny started the company in 1997 as a real estate firm focused on acquisitions. It has grown into a development company that also does leasing, sales and property management. Some of its more notable Wichita projects include the redevelopment of Union Station and the former Northrock Theater, which is currently Occidental’s headquarters.
The company has 28 employees in Wichita and Kansas City offices, including a second Kansas City office that’s opening at the Sprint campus where some Sprint workers eventually will transition to the Occidental team for managing the property.
“This is a massive . . . property,” Oborny said. “We will hire a number of people to manage it.”
He said it was “all hands on deck” for his employees during the finalization of the Sprint deal.
As much as Oborny wants to take on larger projects like the Sprint deal, he said, “We won’t do it . . . by sacrificing our other existing projects.”
Oborny said the Sprint deal is no different than Occidental’s other deals.
“It’s just there’s more zeros behind it.”
Occidental financed the deal through internal capital, silent equity partners and backing from New York-based J.P. Morgan.
“They’re a tremendous lending partner for us,” Oborny said.
Due to the size of the deal, Oborny said he took on some new equity partners, the majority of whom are from the Wichita area.
“We were very intentional,” he said. Oborny said he wanted local partners who in turn could support others locally.
“The focus was for them to support Wichita’s entrepreneurship ecosystem.”
Finalizing the Sprint deal means more opportunity for Occidental as well, Oborny said.
“You’ve got a lot of opportunities to take that size and use it to your advantage.”
The Sprint campus has 190 acres, 60 of which are left to develop at 119th and Nall.
Oborny called it “ground zero in Kansas City for the best demographics.”
There are already 13,000 employees on the Sprint campus, including about 6,500 employed by Sprint.
The company has a proposed $26 billion merger with T-Mobile. If it happens, Sprint said it would retain its Overland Park offices as a second headquarters.
There are 20 buildings on the campus, three of which are support centers, including a power plant, a warehouse and a 68,000-square-foot corporate fitness facility that is second only to the one Apple has for its employees.
There also are already a lot of amenities on the campus, such as a Walgreens, a flower shop, a salon and several banks, but Occidental wants to increase those as it did at OPX. For instance, child-care options are something Oborny would like to add. He said amenities help companies with employee recruitment and retention.
Oborny said he’s already been contacted by a lot of regional and national brokerages about possible deals.
“We think there’s a ton of momentum and a lot of interest from the public.”
Then there’s Occidental’s momentum.
The Sprint deal is going to keep the company occupied for a while, but that doesn’t mean Oborny isn’t looking for more deals.
“I’m always looking for opportunities,” he said.
For instance, he wants to have an office and at least one project going in Dallas by next year.
“Dallas is a major . . . target strategy.”
While that’s for sure on his list, Oborny said he’s open to opportunities in general.
“Looking for opportunities is a daily process for us.”