Company lists its Prineville property for sale

Contact Industries, maker of wood products for doors, windows, molding and other uses, has put its property in Prineville up for sale.

The company, which employs about 215 people at its manufacturing plant, plans to stay in Prineville, CEO Frank Pearson said Tuesday. Contact Industries, a privately held company, has its home offices in Clackamas.

The Prineville property, 82 acres and 555,000 square feet of buildings, is listed by Compass Commercial Real Estate Services for sale at $6.9 million. The property is currently owned by Contact Properties, an entity created in January to serve as landlord for the manufacturing company and the seller of the property, Pearson said. Contact Industries plans to remain the lone tenant for any new owner.

“We’ve put in place a long-term lease between our two companies,” he said. “From our perspective, it’s the best way to protect our employees and our long-term viability.”

The proposed sale is in contrast to the closing in 2015 of Woodgrain Millwork, also of Prineville, after a heavy snowfall in November 2014 collapsed part of the plant roof. More than 200 workers were displaced; some found work with nearby Contact Industries, Pearson said.

Cash generated by selling Contact’s Prineville property would “allow the owners to focus their efforts” on manufacturing, he said. He said business has improved from the recession of 2007-09. “We’ve grown revenue about 35 percent since 2012,” Pearson said.

Selling a property to another party that serves as a landlord is a common practice in commercial real estate, said Erich Schultz, a partner and principal broker at Compass Commercial.

“For the operating business, it’s business as usual,” he said. “It’s a liquidity event. They can move on and do something else with their capital.”

For prospective buyers, the capitalization rate, or cap rate, is 6.99 percent, Schultz said. The cap rate is the percentage of the listing price that the new owner may expect as income after operating costs, in this case in the first year of the lease if the buyer pays cash, said Joel Thomas, a Compass Commercial broker.

The property comes with a 20-year lease and five-year renewal option. The base rent is $480,000 annually, according to Compass Commercial. Contact Industries would take care of building upkeep.

Contact Industries or its predecessors have occupied the plant on Main Street since 1955, the year it was built, according to Compass Commercial. The company makes wood veneer wall paneling, windows and doors, and components for cabinets, furniture, picture frames, stair parts and ceilings

— Reporter: 541-617-7815, jditzler@bendbulletin.com